USD/JPY Forex Technical Analysis – Move Over 111.490 Shifts Momentum to Upside, Buying Gets Strong on Trade Through 111.896

The Dollar/Yen settled higher last week, while posting a dramatic closing price reversal bottom. The price action suggests a shift in investor sentiment. The market reached its low last week on expectations of a September rate hike after the Fed minutes and speech by Fed Chair Jerome Powell strongly suggested the strong economy means the Fed will continue with its gradual rate hikes.

The USD/JPY settled at 111.268, up 0.762 or +0.69%.

Weekly Swing Chart Technical Analysis

The main trend is up according to the weekly swing chart. However, momentum has been drifting lower since the formation of the closing price reversal top at 113.210 the week-ending July 20. Traders will try to confirm last week’s closing price reversal bottom at 109.770 with a follow-through rally this week.

The actual main top is 113.210. A trade through this top will negate the closing price reversal top and signal a resumption of the uptrend. A move through 108.114 will change the main trend to down.

The minor trend is down. This is helping to give momentum a downside bias. A trade through 112.152 will change the minor trend to up and re-establish an upside bias in momentum.

The main range is 114.728 to 104.600. Its retracement zone at 109.664 to 110.662 was tested last week and provided support.

The intermediate range is 108.114 to 113.210. Its retracement zone fell inside the main retracement zone and also provided support.

The short-term range is 113.210 to 109.770. Its retracement zone at 111.490 to 111.896 is new resistance.

The major long-term retracement zone support is 108.773 to 106.440.

Weekly Swing Chart Technical Forecast

Based on last week’s close at 111.268, the direction of the USD/JPY this week is likely to be determined by trader reaction to the short-term 50% level at 111.490.

A sustained move under 111.490 will indicate the presence of sellers. This could lead to a retest of 110.859 to 110.662.

The 50% level at 110.662 is the trigger point for an acceleration into 110.061, followed by a series of levels at 110.061, 109.770 and 109.664.

The trigger point for another acceleration to the downside is 108.773, followed by the main bottom at 108.114.

A sustained move over 111.490 will signal the presence of buyers. This could spike the USD/JPY into 111.896, followed by 112.152. This price is a potential trigger point for an acceleration to the upside with 113.210 the next major upside target.