USD/JPY Forex Technical Analysis – Trader Reaction to 108.851 Determines Near-Term Direction

The Dollar/Yen is edging higher early Thursday, helped by a slight uptick in U.S. Treasuries and as increased demand for higher risk assets dampened the Japanese Yen’s appeal as a safe-haven asset. U.S. stock index futures are up in the overnight session after a rash of late-day selling in high-growth and technology shares during the regular session on Wednesday.

At 06:05 GMT, the USD/JPY is trading 108.977, up 0.251 or +0.23%.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through 109.362 will signal a resumption of the uptrend. A new main bottom was formed at 108.407. A trade through this bottom will change the main trend to down.

The main range is 109.233 to 108.340. The USD/JPY is currently straddling its 50% level at 108.851.

Daily Swing Chart Technical Forecast

The early price action suggests the direction of the USD/JPY on Wednesday is likely to be determined by trader reaction to the pivot at 108.851.

Bullish Scenario

A sustained move over 108.851 will indicate the presence of buyers. If this move is able to generate enough upside momentum then look for a possible surge into the main top at 109.362. Taking out this level could trigger an extension of the rally into the June 5, 2020 main bottom at 109.849. This is a potential trigger point for an acceleration to the upside.

Bearish Scenario

A sustained move under 108.851 will signal the presence of sellers. This could trigger a break into the main bottom at 108.407.

Taking out 108.407 will change the main trend to down. This could trigger a further break into the minor bottom at 108.340, followed by the Fibonacci level at 108.230.

The Fib level is a potential trigger point for an acceleration to the downside with the retracement zone at 107.154 to 106.619 the next major downside target area.