USD/JPY Forex Technical Analysis – May 15, 2019 Forecast

Increased demand for higher risk assets and a rise in U.S. Treasury yields helped boost the Dollar/Yen on Tuesday. The dollar rose as investors shed safe-haven Yen positions put on as protection against the steep sell-off in U.S. equity markets that was fueled by the heightened volatility over U.S.-China trade relations.

On Tuesday, U.S. stocks rose, recovering some of the sharp losses from the previous session. Treasury yields rose, making the U.S. a more attractive investment after President Trump said that a breakthrough with China, if it happens, will be announced in three to four weeks.

The USD/JPY settled at 109.606, up 0.299 or +0.27%. At 23:12 GMT, the Dollar/Yen is trading 109.645, up 0.039 or +0.04%.

Daily Technical Analysis

The main trend is down according to the daily swing chart. The inside move suggests investor indecision and impending volatility. It could also mean the Forex pair is going through a transition period before a shift in investor sentiment.

A trade through 109.010 will signal a resumption of the downtrend. This could lead to a test of the main bottom at 108.495. The trend will change to up on a move through 111.700. This is highly unlikely, but there is room for a rally into a short-term retracement zone.

The main range is 105.180 to 112.405. Its retracement zone at 108.793 to 107.940 is support.

The short-term range is 111.700 to 109.010. Its retracement zone at 110.355 to 110.672 is the next upside target. Since the main trend is down, sellers could come in on a test of this zone.

Daily Technical Forecast

Based on Tuesday’s close at 109.606 and the inside trading range, the direction of the USD/JPY on Wednesday is likely to be determined by trader reaction to Monday’s high at 109.859.

Bullish Scenario

Taking out 109.859 will indicate the presence of buyers. This will also make 109.010 a new minor bottom. If the move creates enough upside momentum then look for a rally into the short-term 50% level at 110.355. This is followed by a downtrending Gann angle at 110.530. Look for sellers to show up on a test of these levels.

Bearish Scenario

The inability to overcome 109.859 will signal the presence of sellers. If this move generates enough downside momentum then look for the weakness to possibly extend into this week’s low at 109.010, followed by the main 50% level at 108.793.

Crossing to the weak side of the downtrending Gann angle at 108.655 will put the USD/JPY in a bearish position. A move through 108.495 will reaffirm the downtrend. This could trigger an acceleration into the main Fibonacci level at 107.940.