USD/JPY Forex Technical Analysis – Strengthens Over 108.866, Weakens Under 108.690

Increasing demand for higher-yielding assets, driven by a more positive tone about the prospect of a U.S.-China trade deal is helping to generate some of the upside momentum. The energy created by better-than-expected U.S. economic data on Friday has also carried over into Monday, giving the U.S. Dollar a boost.

At 04:26 GMT, the USD/JPY is trading 108.752, up 0.099 or +0.09%.

Daily Technical Analysis

The main trend is up according to the daily swing chart. However, momentum is trending lower. A trade through 108.280 will change the main trend to down. This is followed closely by another main bottom at 108.244. A trade through 109.488 will signal a resumption of the uptrend.

The minor trend is down. This is controlling the momentum. A trade through 109.073 will change the minor trend to up. This will shift momentum back to the upside.

The first minor range is 107.891 to 109.488. Its 50% level or pivot at 108.690 is currently being tested.

The second minor range is 109.488 to 108.280.Its 50% level or pivot at 108.866 is a potential trigger point for an upside breakout.

The short-term range is 106.485 to 109.488. Its retracement zone at 107.987 to 107.632 is important support.

Daily Technical Forecast

On Monday, four technical level are clustered at 108.690, 108.738, 108.798 and 108.866. Based on the current price at 108.752, the direction of the USD/JPY is likely to be determined by trader reaction to the second pivot at 108.690.

Bullish Scenario

A sustained move over 108.690 will indicate the presence of buyers. This could lead to a labored rally with potential resistance a downtrending angle at 108.738, an uptrending angle at 108.798 and another 50% level at 108.866. This is a potential trigger point for an acceleration to the upside.

Taking out 108.866 could create the upside momentum needed to challenge the minor top at 109.073, followed by a downtrending Gann angle at 109.113.

Bearish Scenario

A sustained move under 108.690 will signal the presence of sellers. The first downside target is a long-term uptrending Gann angle at 108.526. If this angle fails then look for the selling to possibly extend into the main bottom at 108.280. The main trend will change to down if this bottom fails to hold.