USD/JPY Forex Technical Analysis – Moving Closer to August 2019 Bottom at 104.463

Falling Treasury yields and another drop in global equity markets is helping to drive the Dollar/Yen lower on Friday. Asian equities tumbled Friday as analysts warned the volatility that has characterized markets during the coronavirus crisis is likely to continue for some time.

While governments and central banks have unleashed or prepare to roll out stimulus measures, the rapid spread of the disease and rising death toll are putting a greater strain on economies and stoking concerns of a worldwide recession, AFP News wrote. This is driving up demand for the safe-haven Japanese Yen.

At 05:02 GMT, the USD/JPY is trading 105.834, down 0.311 or -0.29%.

Daily Technical Analysis

The main trend is down according to the daily swing chart. The USD/JPY is in no position to change the main trend to up, but due to the prolonged move down in terms of price and time, all bullish traders can hope for is a closing price reversal bottom. This won’t change the trend, but it could trigger a two to three day countertrend rally. This would alleviate some of the downside pressure and likely set up the next shorting opportunity.

The minor trend is also down. A trade through 107.742 will change the minor trend to up. This will also shift momentum to the upside.

On the upside, the nearest resistance is the 107.428 to 108.434 retracement zone.

Daily Technical Forecast

Based on the early price action and the current price at 105.834, the direction of the USD/JPY the rest of the session on Friday is likely to be determined by trader reaction to yesterday’s close at 106.145.

Bearish Scenario

A sustained move under 106.145 will indicate the presence of sellers. This could lead to a test of a long-term uptrending Gann angle at 106.563. We could see a technical bounce on the first test of this angle. However, if it fails then look for a potential acceleration to the downside with the next target the August 26, 2019 main bottom at 104.463.

Bullish Scenario

A sustained move over 106.145 will signal the return of buyers. This could trigger a rebound rally into a pair of Gann angles at 105.492 and 106.726. Since the main trend is down, sellers are likely to come in on a test of these angles.

Overcoming 106.726 will indicate the short-covering is getting stronger. This could trigger an acceleration into the main Fibonacci level at 107.428.