USD/JPY Forex Technical Analysis – Trader Reaction to 105.526 to 105.885 Sets the Tone

Increased demand for risky assets is helping to support the Dollar/Yen early Tuesday as investors continue to shed the safe-haven Japanese Yen after Friday’s steep plunge. Among the biggest drivers of the rally were an announcement from President Donald Trump, strong polling numbers for his November challenger Joe Biden and optimism behind stimulus negotiations between House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin.

At 01:48 GMT, the USD/JPY is trading 105.722, down 0.016 or – 0.02%.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart, however, momentum has been trending higher since the formation of the closing price reversal bottom on September 21. The main trend will change to up on a trade through 107.049. A move through 104.002 will signal a resumption of the downtrend.

The minor trend is down. A trade through 105.804 will change the minor trend to up. This will confirm the shift in momentum. The new minor bottom is 104.944.

The minor range is 104.002 to 105.804. Its 50% level at 104.903 is support.

The short-term range is 107.049 to 104.002. The market is currently testing its retracement zone at 105.526 to 105.885. This zone is controlling the near-term direction of the Forex pair.

Daily Swing Chart Technical Forecast

A trade inside 105.526 to 105.885 will signal a neutral market

Increasing demand for riskier assets could trigger a breakout over the Fibonacci level at 105.885. With the nearest minor top at 106.550 and a pair of main tops at 106.948 and 107.049, there is the possibility of an acceleration to the upside over 105.885.

If fear and uncertainty return to the markets and we see another sharp decline in U.S. equity markets then look for a breakdown under the 50% level at 105.526. This is followed by 105.374 then a support cluster at 104.944 to 104.903.