USD/JPY Forex Technical Analysis – Trader Choice: Short Weakness Under 103.177 or Play for Pullback to Short

The Dollar/Yen is trading lower early Thursday as progress toward agreeing on a U.S. stimulus package and a Brexit deal boosted risk appetite while reducing the greenback’s appeal as a safe-haven asset.

According to CNBC, Congressional negotiators were “closing in on” a $900 billion COVID-19 aid bill, lawmakers and aides said on Wednesday, with the tone the most positive it’s been in months.

Across the Atlantic, the European Union’s chief executive said a deal with the UK was nearer, although success wasn’t guaranteed.

At 02:29 GMT, the USD/JPY is trading 103.328, down 0.094 or -0.09%.

The Federal Reserve on Wednesday vowed to keep funneling cash into financial markets until the U.S. economic recovery is secure, a promise of long-term help that fell short of some investors’ hopes of an immediate move to shore up a recent pandemic-related slide.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through 103.177 will reaffirm the downtrend. The main trend changes to up on a move through 104.751.

The short-term range is 103.177 to 105.677. Its retracement zone at 104.132 to 104.427 is resistance.

Daily Swing chart Technical Analysis

The USD/JPY is currently testing a major support level at 103.177. This level is very critical because the Forex pair could fall off a cliff if this bottom is violated with the next major support the November 9, 2016 main bottom at 101.179.

Aggressive counter-trend buyers may come in to defend against this steep break so be prepared for volatile, whip-saw action. This makes the USD/JPY vulnerable to a closing price reversal bottom. This chart pattern won’t change the main trend to up, but it could trigger a 2 to 3 day counter-trend rally.

Basically, the fundamentals are bearish, but the next major move will be determined by personal preference. Bearish traders have the choice to sell weakness through 103.177, or wait for a short-term pullback to short.