Advertisement
Advertisement

USD/JPY Forex Technical Analysis – Strengthens Over 108.720, Weakens Under 108.589; Expect Volatility

By:
James Hyerczyk
Published: May 12, 2021, 09:44 UTC

The direction of the USD/JPY on Wednesday is likely to be determined by trader reaction to the pair of 50% levels at 108.720 and 108.589.

USD/JPY

In this article:

The Dollar/Yen is edging higher early Wednesday, shortly before the release of a U.S. consumer inflation report that could reveal the biggest gain in nearly a decade.

April’s consumer price index is due to be released at 12:30 GMT, with it expected to have grown 0.2% on the previous month, representing a 3.6% jump since last year, according to Dow Jones estimates.

At 09:16 GMT, the USD/JPY is trading 108.755, up 0.136 or +0.12%.

The jump in the headline CPI would be the largest since September 2011. CPI excluding food and energy is expected to rise 0.3% in April and 2.3% over the past 12-months. CPI rose 0.6% in March from the previous month and 2.6% from a year ago, according to the Department of Labor.

Daily USD/JPY

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through 107.479 will signal a resumption of the downtrend. A move through 110.966 will change the main trend to up.

The minor trend is also down. A trade through 108.337 will indicate the selling pressure is getting stronger. The main trend will change to up on a trade through 109.698. This will also shift momentum to the upside.

Taking out 108.337 will also make 109.698 a new main top and change in trend point.

The USD/JPY is currently straddling a pair of 50% levels at 108.720 and 108.589.

On the upside, resistance is a pivot at 109.018, followed by a short-term retracement zone at 109.223 to 109.634.

On the downside, the major support is a retracement zone at 108.230 to 107.154. This zone stopped the selling at 107.479 on April 23.

Daily Swing Chart Technical Forecast

The direction of the USD/JPY on Wednesday is likely to be determined by trader reaction to the pair of 50% levels at 108.720 and 108.589. Expect to see heightened volatility at 12:30 GMT with the release of the CPI report.

Bullish Scenario

A sustained move over 108.720 will indicate the presence of buyers. If this creates enough upside momentum then look for a move into 109.018. Overtaking this level will indicate the buying is getting stronger with the next target zone 109.223 to 109.634.

A move through 109.698 could trigger an acceleration to the upside.

Bearish Scenario

A sustained move under 108.589 will signal the presence of sellers. If this move creates enough downside momentum then look for the selling pressure to extend into 108.230. Taking out this level with conviction could trigger an acceleration into the 107.479 main bottom.

For a look at all of today’s economic events, check out our economic calendar.

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.

Did you find this article useful?

Advertisement