USD/JPY Forex Technical Analysis – Retesting Main Retracement Zone at 105.526 to 105.885

Increased demand for riskier assets is helping the Dollar/Yen recover some of Friday’s steep break. The catalyst behind the move is a rise in stock futures on Sunday as investors brace for another volatile week with President Donald Trump’s hospitalization adding more uncertainty to the market outlook ahead of Election Day.

At 04:39 GMT, the USD/JPY is trading 105.553, up 0.218 or +0.21%.

Futures on the Dow Jones Industrial Average climbed about 200 points. The S&P 500 futures and the NASDAQ 100 futures both rose about 0.7%. These moves encouraged investors to shed the safe-haven Japanese Yen in favor of the U.S. Dollar.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart, but momentum has been trending higher since the formation of the closing price reversal bottom on September 21. A trade through 107.049 will change the main trend to up. A move through 104.002 will signal a resumption of the downtrend.

The minor trend is also down. A trade through 105.804 will change the minor trend to up. This will confirm the shift in momentum.

The minor range is 104.002 to 105.804. Its 50% level at 104.903 is potential support. Friday’s spike to the downside stopped just above this level at 104.944.

The main range is 107.049 to 104.002. Its retracement zone at 105.526 to 105.885 is the primary upside target. This zone is currently being tested. Trader reaction to this zone is likely to determine the near-term direction of the USD/JPY.

Daily Swing Chart Technical Forecast

Based on the early price action, the direction of the USD/JPY is likely to be determined by trader reaction to the main 50% level at 105.526.

Bullish Scenario

A sustained move over 105.526 will indicate the presence of buyers. If this move creates enough upside momentum then look for the rally to possibly extend into the minor top at 105.804, followed by the main Fibonacci level at 105.885. The latter is a potential trigger point for an acceleration to the upside.

Bearish Scenario

A sustained move under 105.526 will signal the presence of sellers. If this generates enough downside momentum then look for the selling to possibly extend into Friday’s low at 104.944, followed by the minor 50% level at 104.903. The latter is a potential trigger point for an acceleration to the downside.

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