USD/JPY Forex Technical Analysis – Near-Term Target Zone is 109.511 to 109.695

The Dollar/Yen is trading higher on Wednesday as a rebound in global equity markets dampened demand for the safe-haven Japanese Yen. Essentially, investors are taking a less pessimistic view of the potential economic fallout from China’s coronavirus outbreak.

Demand for the lower risk Japanese Yen began to wane on Tuesday after the World Health Organization’s director-general said he is confident China can control the spread of the coronavirus, the Chinese Ministry said.

At 03:00 GMT, the USD/JPY is trading 109.190, up 0.036 or +0.03%.

Daily Technical Analysis

The main trend is up according to the daily swing chart. However, momentum is trending lower. The main trend will change to down on a trade through 108.732. A move through 110.290 will signal a resumption of the uptrend.

The USD/JPY is trading inside a major retracement zone at 108.421 to 109.361. This is based on a longer-term trading range.

The main range is 107.651 to 110.290. Its retracement zone is 108.971 to 108.659. This zone stopped the selling at 108.732 on Monday.

The short-term range is 110.290 to 108.732. Its retracement zone at 109.511 to 109.695 is the next upside target zone.

Daily Technical Forecast

Based on the early price action and the current price at 109.190, the direction of the USD/JPY the rest of the session on Wednesday is likely to be determined by trader reaction to the downtrending Gann angle at 109.290.

Bullish Scenario

Taking out 109.290 will indicate the presence of buyers. The first target is the major Fibonacci level at 109.361. Overcoming this level could trigger a surge into the short-term 50% level at 109.511. This is another trigger point for an acceleration into the short-term Fibonacci level at 109.695.

Traders need to watch how the market responds to a test of 109.511 to 109.695 because aggressive counter-trend sellers may step in on a test of this zone in an effort to form a secondary lower top.

Bearish Scenario

A sustained move under 109.290 will signal the presence of sellers. This could trigger a break into a support cluster at 108.982 to 108.971. If the latter fails as support then look for the break to extend into the next uptrending Gann angle at 109.790. This is the last potential support angle before the 108.732 main bottom and the main Fibonacci level at 108.659.