USD/JPY Forex Technical Analysis – Weekly Chart Strengthens Over 111.896, Weakens Under 110.662

The USD/JPY went on a wild ride before settling lower last week. At one point, the Dollar/Yen was supported by expectations of higher interest rates by the Fed. This assessment was boosted by better-than-expected U.S. Gross Domestic Product data. Buyers, however, caved to pressure from safe haven buyers after concerns were raised by the escalation of the trade disputes between the United States and China, Canada and the European Union.

Weekly Swing Chart Technical Analysis

The main trend is up according to the weekly swing chart. However, momentum has been trending lower since the 113.210 top the week-ending July 20.

A trade through 113.210 will negate this reversal top and signal a resumption of the uptrend. A move through 109.770 will negate the minor reversal bottom at 109.77 and change the main trend to down.

The major retracement zone is 110.859 to 109.664. Another major 50% level comes in at 108.773.

The main range is 108.114 to 113.210. Its retracement zone is 110.662 to 110.061. This zone is support.

The short-term range is 113.210 to 109.770. Its retracement zone at 111.490 to 111.896 is resistance. This zone stopped the rally last week at 111.830.

Weekly Swing Chart Technical Forecast

Based on last week’s price action, the direction of the USD/JPY this week is likely to be determined by trader reaction to the 50% level 110.662.

A sustained move over 110.662 will indicate the presence of buyers. Holding above 110.859 will indicate the buying is getting stronger. If this move creates enough upside momentum then we could see a retest of last week’s resistance zone at 111.490 to 111.896.

The buying is going to have to be strong enough to take out 111.896 to trigger an upside breakout.

A sustained move under 110.662 will signal the presence of sellers. This is a potential trigger point for an acceleration to the downside with the next major targets coming in at 110.061, 109.770 and 109.664.

The distance between the retracement levels on the weekly chart indicates that trader should prepare for volatility and the possibility of bigger-than-average ranges.