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James Hyerczyk

The Dollar/Yen is trading flat on Friday as conditions have calmed in the financial markets following yesterday’s steep sell-off. The Forex pair plunged on Thursday on aggressive safe-haven buying in reaction to a steep drop in U.S. equity markets and Treasury yields.

The catalysts behind the decline in demand for risk and the need for protection were concerns over escalating tensions between the United States and China, and worries over a slowdown in the U.S. economy after manufacturing and services PMI data came in lower than expected.

At 06:11 GMT, the USD/JPY is trading 109.556, down 0.038 or -0.03%.


Daily Technical Analysis

The main trend is down according to the daily swing chart. A trade through 109.010 will signal a resumption of the downtrend. The main trend will change to up on a trade through 110.677.

The minor range is 109.010 to 110.677. Its retracement zone is 109.844 to 109.647 is controlling the short-term direction of the USD/JPY.

The main range is 111.700 to 109.010. Its retracement zone at 110.355 to 110.672 is resistance. This zone stopped the rally on May 21 at 110.677.


Daily Technical Forecast

Based on the early price action and the current price at 109.556, the direction of the USD/JPY on Friday is likely to be determined by trader reaction to the uptrending Gann angle at 109.573.

Bullish Scenario

A sustained move over 109.573 will indicate the return of buyers. Crossing over the short-term Fibonacci level at 109.647 will indicate the buying is getting stronger. This could trigger a rally into the short-term 50% level at 109.844, followed by the downtrending Gann angle at 109.927.

The angle at 109.927 is the trigger point for an acceleration to the upside with 110.302 the next likely upside target.

Bearish Scenario

A sustained move under 109.573 will signal the presence of sellers. If this move creates enough downside momentum then look for the selling to possibly extend into the next uptrending Gann angle at 109.291. This is the last potential support angle before the 109.010 main bottom.

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