USD/JPY Forex Technical Analysis – Weekly Outlook Strengthens Over 113.356, Weakens Under 112.978

The Dollar/Yen is posting a huge recovery on the weekly chart after three weeks of safe-haven related selling pressure. A stabilizing stock market, rising Treasury yields and a dovish Bank of Japan have all combined to make the U.S. Dollar a more desirable asset while encouraging those who bought the Japanese Yen as protection recently to shed those positions.

At 0556 GMT, the USD/JPY is trading 113.270, up 0.190 or 0.17%.

Weekly Swing Chart Technical Analysis

The main trend is up according to the weekly swing chart. This week’s price action has helped form a new swing bottom at 111.375. A trade through this level will change the main trend to down. A move through 114.580 will signal a resumption of the uptrend with 114.728 the next major target.

The minor trend is also up, giving the Forex pair solid upside momentum.

The main range is 108.114 to 114.580. Its retracement zone at 111.347 to 110.584 provided support last week when the market tested 111.375.

The intermediate range is 109.770 to 114.580. Its retracement zone at 112.175 to 111.607 provided support this week at 111.775.

The short-term range is 114.580 to 111.375. Its retracement zone at 112.978 to 113.356 is currently being tested. Trader reaction to this zone should determine the direction of the USD/JPY the rest of the week. Aggressive counter-trend sellers may show up on a test of this zone in order to form a secondary lower top. Trending-trading buyers are going to try to drive the market through this zone.

Weekly Swing Chart Technical Forecast

Based on this week’s price action and the current price at 113.270, the direction of the USD/JPY the rest of the week is likely to be determined by trader reaction to the 50% level at 112.978.

A sustained move over 112.978 will signal the presence of buyers. This should drive the USD/JPY into the Fibonacci level at 113.356. Taking out this level could generate the upside momentum needed to challenge the main top at 114.580.

A sustained move under 112.978 will indicate the presence of sellers. The USD/JPY could begin to weaken at this point. If momentum begins to increase then 112.175 to 111.607 will become the primary downside target.

Basically, for the rest of the week, look for an upside bias to continue on a sustained move over 113.356 and for a downside bias to develop on a sustained move under 112.978.