USD/JPY Forex Technical Analysis – Strengthens Over 110.056, Weakens Under 109.821

Lower demand for risky assets are weighing on the Dollar/Yen early Friday. Asia Pacific markets are down, following three sessions of broad gains, as investors waited for the release of China’s January trade numbers. Safe-haven demand is also inching higher ahead of the release of the U.S. Non-Farm Payrolls report on Friday at 13:30 GMT.

At 05:46 GMT, the USD/JPY is trading 109.902, down 0.085 or -0.08%.

On Tuesday, the USD/JPY hit its highest level since January 21 on the back of upbeat U.S. economic data and China’s stimulus moves earlier in the week. China also announced it would halve its retaliatory tariffs.

Daily Technical Analysis

The main trend is up according to the daily swing chart. A trade through 110.290 will signal a resumption of the uptrend. A move through 108.313 will change the main trend to down.

Long-term retracement zone support comes in at 109.361 to 108.421. Holding above this zone will continue to generate an upside bias.

The main range is 107.651 to 110.290. Its retracement zone at 108.971 to 108.659 is support. This zone also falls inside the major retracement zone.

Daily Technical Forecast

Based on the early price action, the direction of the USD/JPY the rest of the session on Friday is likely to be determined by trader reaction to a pair of downtrending Gann angles at 109.821 to 110.056.

Bullish Scenario

The main trend is up so 109.821 is the first support. If this move is able to generate enough upside momentum then look for a rally into the next downtrending resistance angle at 110.056.

The downtrending angle at 110.056 is the last potential resistance angle before the 110.290 main top. It is also a trigger point for an acceleration to the upside.

Bearish Scenario

A sustained move under 109.821 will signal the presence of sellers. This could trigger a break into an uptrending Gann angle at 109.563. Since the main trend is up, watch for a technical bounce on the first test of this angle.

If 109.563 fails as support, the USD/JPY could break into the main Fibonacci level at 109.361.