USD/JPY Forex Technical Analysis – Near-Term Direction Determined by Trader Reaction to 109.371

The Dollar/Yen finished higher but well off its high on Friday after a wave of sellers stopped the Forex pair from taking out its recent top at 109.728 despite potentially bullish news that drove up demand for risky assets.

Early in the session, prices moved higher after reports of a Phase One trade deal between the United States and China put investors into a risk-on mode. Prices retreated throughout the session, however, as concerns over the details of the deal encouraged investors to shed higher-yielding assets.

On Friday, the USD/JPY settled at 109.354, up 0.056 or +0.05%.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through 109.728 will reaffirm the uptrend. A move through 108.430 will change the main trend to down.

The major range is 112.405 to 104.463. Its retracement zone at 108.434 to 109.371 is controlling the longer-term direction of the USD/JPY. The Forex pair is currently trading at the top end of this zone.

The short-term range is 108.430 to 109.707. Its 50% level at 109.069 is the first minor downside target.

The main range is 106.485 to 109.728. If the major 50% level fails as support then look for a break into the retracement zone at 108.107 to 107.724.

Daily Swing Chart Technical Forecast

Based on Friday’s close at 109.354, the direction of the USD/JPY on Monday is likely to be determined by trader reaction to the major Fibonacci level at 109.371.

Bullish Scenario

A sustained move over 109.371 will indicate the presence of buyers. If this move creates enough upside momentum then look for a possible test of last week’s high at 109.707, followed by the main top at 109.728 and the May 30 top at 109.930.

Bearish Scenario

A sustained move under 109.371 will signal the presence of sellers. This could trigger a break into the short-term 50% level at 109.069. Since the main trend is up, buyers could come in on the first test of this level.

If 109.069 fails as support, we could see the start of a steep break with 108.434 to 108.430