USD/JPY Forex Technical Analysis – Trader Reaction to 114.054 Pivot Sets the Near-Term Tone

The Dollar/Yen is edging higher early Tuesday despite a dip in U.S. Treasury yields at the start of the week. The price action the last several sessions suggests investor indecision over Fed policy, which is helping to produce a two-sided trade. Investors seem to have priced in the start of tapering in November, but are uncertain over the timing of the first rate hike by the central bank.

At 03:50 GMT, the USD/JPY is trading 113.912, up 0.192 or +0.17%.

On Tuesday, traders will get the opportunity to react to the latest Consumer Confidence data from the Conference Board at 14:00 GMT. It is expected to dip to 108.40 from 109.30. A lower than expected number will raise doubts over an early Fed rate hike, which could put downward pressure on the Dollar/Yen.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum has been trending lower since the formation of the October 20 closing price reversal top.

A trade through 114.694 will negate the closing price reversal top and signal a resumption of the uptrend. A move through 110.826 will change the main trend to down.

The minor range is 114.694 to 113.414. The USD/JPY is currently trading on the weak side of its pivot at 114.054, making it potential resistance.

The short-term range is 110.826 to 114.694. If 113.414 fails as support then look for the selling to possibly extend into its 50% level at 112.760.

Daily Swing Chart Technical Forecast

The direction of the USD/JPY on Tuesday is likely to be determined by trader reaction to the pivot at 114.054.

Bullish Scenario

A sustained move over 114.054 will indicate the presence of buyers. If this move creates enough upside momentum then look for a possible surge into 114.694 – 114.728. The latter is a potential trigger point for an acceleration to the upside, which would put 115.000 on the radar.

Bearish Scenario

A sustained move under 114.054 will signal the presence of counter-trend sellers. The first downside target is 113.414. Taking out this level will indicate the selling pressure is getting stronger. This could trigger an acceleration to the downside with the short-term 50% level at 112.760 the next likely target.

Counter-trend sellers may try to defend 114.054. They will be trying to produce a potentially bearish secondary lower top.