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USD/JPY Forex Technical Analysis – Weakens Under 104.132, Strengthens Over 104.427

By:
James Hyerczyk
Published: Dec 9, 2020, 21:25 UTC

The near-term direction of the USD/JPY will be determined by trader reaction to the 50% level at 104.427 and the 61.8% level at 104.132.

USD/JPY

In this article:

The Dollar/Yen is trading marginally higher late in the session on Wednesday after giving back most of its earlier gains. Shortly after the opening, the Forex pair rose as hopes for a vaccine-linked economic recovery and more domestic fiscal stimulus sparked demand for the higher-yielding U.S. Dollar. Stocks also rose to record highs.

At 21:10 GMT, the USD/JPY is trading 104.213, up 0.054 or +0.05%.

Money flowed into the Japanese Yen throughout the session as the major U.S. stock indexes fell from their highs, weighed down by technology stocks, as investors grew frustrated with the progress on developments related to a fresh economic stimulus deal, with negotiations between government leaders dragging on.

Daily USD/JPY

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through 104.751 will change the main trend to up, while a drive through 103.653 will reaffirm the downtrend.

The short-term range is 103.177 to 105.677. The market has been straddling its retracement zone at 104.427 to 104.132 for about three weeks.

The main range is 107.049 to 103.177. Its retracement zone at 105.113 to 105.570 is the primary upside target.

Short-Term Outlook

Wednesday’s price action indicates the near-term direction of the USD/JPY will be determined by trader reaction to the 50% level at 104.427 and the 61.8% level at 104.132.

Bullish Scenario

A sustained move over 104.427 will indicate the presence of buyers. If this creates enough upside momentum then look for a surge into a pair of tops at 104.751 and 104.761.

Taking out 104.761 will change the main trend to up. This could trigger a rally into the short-term 50% level at 105.113.

Bearish Scenario

A sustained move under 104.132 will signal the presence of sellers. If this move generates enough downside momentum then look for a possible break into the low at 103.673, followed by the main bottom at 103.653.

Taking out 103.653 will reaffirm the downtrend. This could lead to a test of 103.177.

For a look at all of today’s economic events, check out our economic calendar.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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