USD/JPY Forex Technical Analysis – Strengthens Over 108.311, Weakens Under 108.102

Based on the trade the last two sessions, the direction of the USD/JPY on Wednesday is likely to be determined by trader reaction to 108.311.
James Hyerczyk
USD/JPY

The Dollar/Yen finished slightly lower on Wednesday, while trading inside the previous day’s range. The price action suggests investor indecision and impending volatility. Investors showed little reaction to a volatile Treasury market where yields dipped and firmed during the same session. The price action suggests investors may be already squaring positions ahead of today’s European Central Bank monetary policy decisions and next week’s interest rate decisions from the U.S. Federal Reserve and Bank of Japan.

On Wednesday, the USD/JPY settled at 108.179, down 0.043 or -0.04%.

Daily USD/JPY

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. The main trend will change to up on a trade through 108.991. A move through 107.212 will signal a resumption of the downtrend.

The minor trend is also down. A trade through 108.375 will change the minor trend to up. This will also shift momentum to the upside.

The short-term range is 108.991 to 107.212. Its retracement zone at 108.102 to 108.311 is currently being tested. The direction of the USD/JPY on Thursday is likely to be determined by trader reaction to this zone.

On the downside, the nearest support is the intermediate retracement zone at 107.883 to 107.622.

The main range is 110.677 to 106.775. If the minor trend changes to up then its retracement zone at 108.726 to 109.186 is likely to become the next upside target. This zone is resistance. It stopped the rally on July 10 at 108.991.

Daily Swing Chart Technical Forecast

Based on the trade the last two sessions, the direction of the USD/JPY on Wednesday is likely to be determined by trader reaction to 108.311.

Bullish Scenario

A sustained move over 108.311 will indicate the presence of buyers. A drive through 108.375 will change the minor trend to up. This could generate the upside momentum needed to challenge the main 50% level at 108.726.

Bearish Scenario

A sustained move under 108.311 will signal the presence of sellers. They are defending against a breakout to the upside. The first downside target is the short-term 50% level at 108.102.

If 108.102 fails as support then look for a potential break into the intermediate 50% level at 107.883, followed by the intermediate Fibonacci level at 107.622.

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