USD/JPY Forex Technical Analysis – Trade Through 109.534 Confirms Closing Price Reversal TopBased on Friday’s price action and the close at 109.782, the direction of the USD/JPY on Monday is likely to be determined by trader reaction to Friday’s low at 109.534.
The Dollar/Yen firmed as global equity markets and government debt yields slumped on Friday as lingering concerns over the impact of the coronavirus on global growth overshadowed a better-than-expected U.S. jobs report that indicated an economy on pace to grow moderately.
Wall Street stocks fell from record highs and the safe-haven Japanese Yen rose as investors weighed how much the virus is likely to impact supply chains. China accounts for about one-third of global growth.
On Friday, the USD/JPY settled at 109.782, down 0.205 or -0.19%.
Daily Swing Chart Technical Analysis
The main trend is up according to the daily swing chart. The trend turned up last week when buyers took out the last swing top at 109.266. The main trend will change to down on a move through 108.313.
On Friday, the USD/JPY posted a closing price reversal top. The chart pattern will be confirmed when sellers take out 109.534. This won’t change the main trend to down, but it could trigger the start of a 2 to 3 day break, or a 50% correction of the last rally.
The major retracement zone is 109.361 to 108.421. This zone is controlling the longer-term direction of the Forex pair.
The short-term range is 108.313 to 110.024. Its 50% level at 109.169 is another potential downside target.
The intermediate range is 107.651 to 110.290. Its retracement zone at 108.971 to 108.659 is another potential support area.
The main range is 106.485 to 110.290. Its retracement zone at 108.421 to 107.939 is another key support area.
Daily Swing Chart Technical Forecast
Based on Friday’s price action and the close at 109.782, the direction of the USD/JPY on Monday is likely to be determined by trader reaction to Friday’s low at 109.534.
Holding above 109.534 will indicate the presence of buyers. They are going to try to defend against the confirmation of the closing price reversal top. Taking out 110.024 will negate the closing price reversal top. This could create the upside momentum needed to challenge the main top at 110.290. Taking out this level will likely lead to a test of the May 21, 2019 main top at 110.677.
Taking out 109.534 will confirm the closing price reversal top. This could trigger a stair-step break with the first two downside targets 109.361 and 109.169.
Taking out 109.169 is likely to drive the USD/JPY into 108.971. This is a potential trigger point for an acceleration into 108.659.