Yen Looks Poised to Build on Gains vs US Dollar
USD/JPY TRADING Strategy: SHORT at 110.09
- Yen looks to extend gains after US Dollar uptrend breaks down
- Price action powered by risk aversion linked to trade war fears
- Down move marks continuation of decline from December 2016
Find out what other traders’ USD/JPY positions say about the on-coming price trend!
The US Dollar looks likely to suffer deeper losses against the Yen after prices slid below trend support guiding them higher since late March. A look at the four-hour chart reveals prices tellingly retested the broken downside barrier as resistance and held there, bolstering the case for bearish conviction.
The perennially anti-risk Japanese unit launched broadly higher amid as trade war fears resurfaced. US President Donald Trump expressed displeasure with bilateral US/China negotiations and later went on to call for a probe of auto imports that seems reminiscent of the run-up to the hike in steel and aluminum tariffs.
Turning to the daily chart, the move is revealed to come after a rejection at falling trend line resistance capping the upside since mid-December 2016. Support lines up in the 107.83-108.83 congestion area, with a break below that targeting a chart inflection point at 106.78
Risk/reward parameters appeared attractive and a short position was activated at 110.09, initially targeting a descent to test support near the 109.00 figure. A stop-loss will be activated if the longer-term falling trend line is breached on a daily closing basis.
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--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.