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USD/JPY Forex Technical Analysis – Risk Off Session Could Pressure Dollar/Yen Early

By:
James Hyerczyk
Published: Sep 22, 2018, 23:36 UTC

Based on Friday’s close at 112.548 and the late session selling pressure, the direction of the USD/JPY on Monday is likely to be determined by trader reaction to Friday’s low at 112.430. The USD/JPY could feel some pressure early Monday so be prepared. Late Friday, China announced it would not continue trade talks with the U.S. This raises the stakes in the trade dispute. We could be looking at a "risk off" day.

USD/JPY

The Dollar/Yen closed higher on Friday, but gave back most of its gains into the close. After increased demand for risk drove prices to their highest level since July 19, the Forex pair retreated on concerns about an escalating trade dispute between the United States and China.

Perhaps limiting losses were expectations of a Fed rate hike at next week’s Federal Open Market Committee meeting. The FOMC is widely expected to raise its benchmark interest rate 25 basis points on Wednesday.

The USD/JPY closed at 112.548, up 0.0051 or +0.05%.

USDJPY
Daily USD/JPY

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through 112.874 will signal a resumption of the trend with the next target the July 10 top at 113.210. The main trend will change to down on a move through 110.379.

The minor trend is also up. A trade through 112.048 will change the minor trend to down. This will also shift momentum to the downside.

The short-term range is 110.379 to 112.874. Since the USD/JPY is up 10 sessions from the last main bottom, we may be due for a short-term correction. The primary downside target is the retracement zone at 111.631 to 111.337.

Daily Swing Chart Technical Forecast

Based on Friday’s close at 112.548 and the late session selling pressure, the direction of the USD/JPY on Monday is likely to be determined by trader reaction to Friday’s low at 112.430.

Taking out 112.430 will indicate the presence of sellers. It will also make 112.874 a new minor top. If the move creates enough downside momentum then look for sellers to make a run at 112.048. Trading through this price will change the minor trend to down.

Depending on the size of the selling pressure, we could eventually see a test of the 50% level at 111.631.

The inability to take out 112.430 will signal the presence of buyers. The first target is Friday’s high at 112.874, followed by the July 10 top at 113.210.

The USD/JPY could feel some pressure early Monday so be prepared. Late Friday, China announced it would not continue trade talks with the U.S. This raises the stakes in the trade dispute. We could be looking at a “risk off” day.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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