USD/JPY Forex Technical Analysis – Taking Out 109.930 With Rising Volume Could Trigger Acceleration to Upside

The Dollar/Yen is trading flat early Thursday ahead of the Bank of Japan’s (BOJ) interest rate and monetary policy decisions. The BOJ is expected to keep monetary settings steady and maintain its upbeat view on the economy, suggesting policymakers are in no hurry to boost stimulus even as global risks threaten to thwart a fragile recovery.

At 02:09 GMT, the USD/JPY is trading 109.586, up 0.007 or +0.01%.

On Wednesday, the USD/JPY rose as U.S. economic data suggested the Fed was unlikely to cut interest rates further. On Tuesday, reports showed a jump in U.S. Building Permits and Housing Starts. Industrial Production also outperformed the estimates.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through 109.728 will signal a resumption of the uptrend. Taking out the May 30 top at 109.930 could trigger an acceleration to the upside.

A trade through 108.430 will change the main trend to down. This is highly unlikely. However, Thursday’s session begins with the USD/JPY up 11 sessions from its last main bottom. This puts it inside the window of time for a potentially bearish closing price reversal top.

This chart pattern won’t signal a change in trend, but it could lead to the start of a 2 to 3 day counter-trend break.

The first support is a major Fibonacci level at 109.371. This is followed by a short-term 50% level at 109.069. This is a potential trigger point for an acceleration to the downside with the next major target the 50% level at 108.434.

Daily Swing Chart Technical Forecast

Today’s trade begins with the USD/JPY trading inside last Friday’s trading range of 109.707 to 109.184 for the fourth straight session. This tends to indicate investor indecision and impending volatility.

Bullish Scenario

Taking out 109.707 will indicate the presence of buyers. Taking out the main top at 109.728 will signal a resumption of the uptrend. A drive through 109.930 could trigger an acceleration to the upside.

Bearish Scenario

The first sign of weakness will be a move under 109.371. Taking out 109.184 could trigger a break into 109.069. This is a potential trigger point for an acceleration into a support cluster at 108.434 to 108.430.