USD/JPY Forex Technical Analysis – Wide Trading Range with 108.305 Upside Target, 104.600 Downside Target

The Dollar/Yen is trading sharply lower early Thursday after clawing back more than 50% of its earlier losses. The Forex pair plunged shortly after the opening after sellers took out several levels of previous technical support.

The catalyst fueling the selling was heightened worries about a global economic slowdown. These worries drove U.S. equity indexes lower, sending investors into safe-haven U.S. Treasurys. This pressured U.S. Treasury yields, making the U.S. Dollar a less-desirable asset.

At 0401 GMT, the USD/JPY is trading 107.172, down 1.709 or -1.57%.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. Due to the prolonged move down in terms of price and time, the only chart pattern to watch for is a closing price reversal bottom. This chart pattern won’t change the trend to up, but it could trigger a 2 to 3 day counter-trend rally. The main trend will change to up on a move through 113.710.

The minor trend is also down. A trade through 111.430 will change the minor trend to up. This will also shift momentum to the upside.

The minor range is 111.430 to 105.180. Its retracement zone at 108.305 to 109.043 is the first upside target. Since the main trend is down, sellers could come in on the first test of this zone.

The main range is 113.710 to 105.180. Its retracement zone at 109.445 to 110.452 is the second upside target. Once again, sellers could come in on a test of this area.

Daily Swing Chart Technical Forecast

The intraday low is 105.180. Taking out this level will indicate the selling is getting stronger. This could trigger a move into the March 26 bottom at 104.600. Look for a technical bounce on the first test of this level.

If 104.600 fails then look out to the downside. The daily chart indicates there is plenty of room to break with the next major target the November 9, 2016 main bottom at 101.179.

The strong intraday rally from the low may create the upside momentum needed to challenge a series of retracement levels at 108.305, 109.043 and 109.445. Sellers could come in on a test of any of these levels. However, the market could strengthen if buyers are able to overcome yesterday’s close at 108.881.