USD/JPY Forex Technical Analysis – Minor Shift in Sentiment Could Lead to Test of 111.507 to 111.350

Since the main trend is up and based on the close at 111.936, the direction of the USD/JPY on Monday is likely to be determined by trader reaction to the nearest uptrending Gann angle at 111.718.
James Hyerczyk

The Dollar/Yen finished lower on Friday. Volume and volatility were well-below average ahead of the Easter holiday week-end. Most of the major banks and institutions were on the sidelines due to a trading holiday in the United States and Europe.

Traders were likely continuing to respond to a reversal to the downside in Treasury yields last Wednesday and the subsequent follow-through to the downside on Thursday. Lower demand for risky appetite also weighed on the Forex pair as well as weaker-than-expected U.S. housing data on Friday.

On Friday, the USD/JPY settled at 111.936, down 0.041 or -0.04%.


Daily Technical Analysis

The main trend is up according to the daily swing chart, however, momentum is trending lower. Earlier in the week, the USD/JPY reaffirmed the uptrend with a trade to 112.170, its highest level since December 20. A trade through this level will reaffirm the uptrend. The daily chart indicates there is no resistance until the December 13, 2018 main top at 113.710. A trade through 110.843 will change the main trend to down.

The USD/JPY did close lower for the week, which produced a potentially bearish closing price reversal top. However, due to the extremely low volume last week, we’re going to reserve judgment on that chart pattern until Monday.

The minor trend is down. The minor trend changed to down on Thursday when sellers took out 111.848. This move shifted momentum to the downside.

The short-term range is 110.843 to 112.170. Its retracement zone at 111.507 to 111.350 is a potential downside target. Since the main trend is up, buyers could come in on a test of this area.

The main range is 109.710 to 112.170. Its retracement zone a 110.94 to 110.650 is another potential support area.

Daily Technical Forecast

Since the main trend is up and based on the close at 111.936, the direction of the USD/JPY on Monday is likely to be determined by trader reaction to the nearest uptrending Gann angle at 111.718.

Bullish Scenario

Holding a test of 111.718 will indicate the presence of buyers. If this can generate enough upside momentum then look for a retest of last week’s high at 112.170. Taking out this level is likely to trigger an acceleration into an uptrending Gann angle at 112.593. Overtaking this angle will put the USD/JPY in a bullish position.

Bearish Scenario

A sustained move under 111.718 will signal the presence of sellers. This could trigger a further break into the short-term 50% level at 111.507. This is followed by the short-term Fibonacci level at 111.350 and an uptrending Gann angle at 111.281.

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