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USD/JPY Exhaustion Shifts Focus to Uptrend Support

USD/JPY Exhaustion Shifts Focus to Uptrend Support

  • USD/JPY outlook constructive above 101.65
  • Updatedtargets & invalidation levels
  • Looking for trade ideas? Check out DailyFX’s 2016 4Q Projections


USD/JPY Daily Chart

Chart Created Using TradingView

Broader Technical Outlook: Last month we highlighted the risk of a washout lower in USDJPY with our focus weighted to the topside while above the August low-day close at 100.29. The subsequent low in price & reversal higher off this region has given shape to this advance with this ascending pitchfork off the lows keeping the broader focus higher while above confluence support at 101.64. A key resistance range is eyed at 104.47/86 where the 61.8% retracement, the 100% extension & a pair of median-lines converge.

USDJPY 120min

USD/JPY 120min Chart

Notes:The pair has continued to trade within the confines of the embedded ascending median-line structure featured in last week’s scalp report and we’ve continued to track this slope on SB Trade Desk. The advance has taken out targets into the 104-handle & the immediate focus remains higher while above 102.61/72. A break below this level would suggest a larger correction is underway with such a scenario eyeing 102.13 & key support at 101.64. From a trading standpoint, I’ll be looking to fade weakness into structural support with a breach higher targeting the upper median-line parallels at 104.47 & 104.86. A quarter of the daily average true range (ATR) yields profit targets of 28-32 pips per scalp.

With NY Fed President William Dudley as well as Kansas City Fed President Esther George (2016 voting-members) scheduled to speak ahead of the FOMC Minutes tomorrow, the fresh batch of commentary may spark increased volatility in USD/JPY especially as Chair Janet Yellen takes to the wires on Friday.On the data front, the key event risks are also up on Friday with U.S. Retail Sales as well as the U. of Michigan confidence survey on tap. Continue tracking this setup and more throughout the week- Subscribe to SB Trade Desk and take advantage of the DailyFX New Subscriber Discount.

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Relevant Data Releases

Other Setups in Play:

---Written by Michael Boutros, Currency Strategist with DailyFX

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.