USD/JPY Forex Technical Analysis – May 22, 2019 Forecast

The Dollar/Yen is trading slightly lower early Wednesday after spiking to the upside and closing higher the previous session. The rally was fueled by higher U.S. Treasury yields after the United States eased trade restrictions on Chinese telecom equipment maker Huawei Technologies.

Traders may be trimming positions ahead of the release of the U.S. Federal Reserve monetary policy minutes at 18:00 GMT. Central bank policymakers said earlier in this month that it would keep interest rates unchanged, though Powell added in a press conference that officials saw a decline in inflation in the first quarter as temporary.

At 04:39 GMT, the USD/JPY is trading 110.435, down 0.050 or -0.05%.

Daily Technical Analysis

The main trend is down according to the daily swing chart. The trend will change to up on a move through the May 3 swing top at 111.700. A trade through 109.010 will signal a resumption of the downtrend.

The USD/JPY is up seven sessions from the last swing bottom on May 13. This puts it in the window of time for a potentially bearish closing price reversal top. If formed and confirmed, this could lead to a 2 to 3 day break. On Monday, the Forex pair posted a reversal top, but it was not confirmed and the rally continued.

The main range is 111.700 to 109.010. The USD/JPY is currently trading inside its retracement zone at 110.355 to 110.672. This zone is controlling the near-term direction of the Forex pair.

Daily Technical Forecast

Based on yesterday’s close at 110.485 and the current price action, the direction of the USD/JPY on Wednesday is likely to be determined by trader reaction to the 50% level at 110.355.

Bullish Scenario

A sustained move over 110.355 will indicate the presence of buyers. If they can generate enough upside momentum then look for the rally to possibly extend into the Fibonacci level at 110.672,

Overtaking 110.672 and crossing to the strong side of the uptrending Gann angle at 110.760 will put the USD/JPY in a bullish position. This could trigger a further rally into a downtrending Gann angle at 111.155.

Bearish Scenario

A sustained move under 110.355 will signal the presence of sellers. This is a potential trigger point for an acceleration into a pair of Gann angles at 109.905 and 109.885. The latter is also the trigger for another steep break.