USD/JPY Forex Technical Analysis – Momentum Shifts to Downside if 109.790 Fails

Based on the early price action and the current price at 108.929, the direction of the USD/JPY the rest of the session on Tuesday is likely to be determined by trader reaction to the minor pivot at 110.040.
James Hyerczyk

The Dollar/Yen is trading lower on Tuesday as the spread of a pneumonia-like virus in China sparked a sudden bout of risk aversion and drove Asian stocks sharply lower. The outbreak of the disease, which has spread from the central city of Wuhan, is still in its early stages. However, it comes right before the peak travel season during the Lunar New Year holidays, raising risks that it could spread further.

At 07:07 GMT, the USD/JPY is trading 108.929, down 0.249 or -0.23%.


Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through 110.290 will signal a resumption of the uptrend. A move through 107.651 will change the main trend to down. This is highly unlikely, but there is room for a normal 50% to 61.8% retracement of the last rally.

The minor trend is also up. A trade through 109.790 will change the minor trend to down. This will also shift momentum to the downside.

The minor range is 109.790 to 110.290. Its pivot at 110.040 is controlling the direction of the USD/JPY on Tuesday.

The first major support is a longer-term Fibonacci level at 109.371.

The short-term range is 107.651 to 110.290. Its retracement zone at 108.971 to 108.659 is the primary downside target.

Daily Swing Chart Technical Forecast

Based on the early price action and the current price at 108.929, the direction of the USD/JPY the rest of the session on Tuesday is likely to be determined by trader reaction to the minor pivot at 110.040.

 Bearish Scenario

A sustained move under 110.040 will indicate the presence of sellers. The first down side target is the minor bottom at 109.790. Taking out this level will change the main trend to down. This could trigger an acceleration into the major support at 109.371.

Bullish Scenario

A sustained move over 110.04 will signal the presence of buyers. If this creates enough upside momentum then look for the rally to possibly extend into the minor top at 110.290. Taking out this level will indicate the buying is getting stronger. This could trigger a rally into the May 21, 2019 top at 110.677.

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