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Japanese Yen Price Action Setups: USD/JPY, EUR/JPY, GBP/JPY, AUD/JPY

Japanese Yen Price Action Setups: USD/JPY, EUR/JPY, GBP/JPY, AUD/JPY

James Stanley, Senior Strategist

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The Japanese Yen is in free-fall and that’s not necessarily a ‘new’ statement – but over the past day USD/JPY has jumped by more than two big figures which would be extreme even for the recent trend of Yen-weakness.

There was a build of consolidation in the matter, however, as I had looked at two weeks ago. There was coiling in each of EUR/JPY, GBP/JPY and AUD/JPY – all the while USD/JPY was working on bullish trend continuation. I issued an Analyst Pick on the Japanese Yen largely due to anticipation of another major move, as such coordinated coil can often lead to.

With USD/JPY making another stratospheric leap to fresh 24-year-highs, it would appear that this theme is upon us. At this stage, USD/JPY has hit yet another fresh 24-year-high at the 142.50 psychological level, which comes after a case of resistance-turned-support at the previous major psychological level at 140.00.

USD/JPY Hourly Price Chart

usdjpy hourly chart

Chart prepared by James Stanley; USD/JPY on Tradingview

Taking a step back on the chart, and that breakout has been running with force for some time already. I had looked at a bullish breakout formation via ascending triangle in USD Price Action setups in the middle of August.

At this point, the trend is incredibly stretched. But, just because something is overbought, it doesn’t mean that it can’t go any higher, as there’s been a strong drive so far this week and there’s no clear evidence yet that it’s abating.

USD/JPY Four-Hour Chart

usdjpy h4 chart

Chart prepared by James Stanley; USD/JPY on Tradingview

Chasing from current levels, however, could be problematic; and given how aggressively this bullish trend has priced-in, there’s not much by way of nearby support levels. From the hourly chart, the most recent higher-high before the current move is all the way down at 140.80. In between current price and that zone is a possible area of interest, an area that had stalled the advance for a few hours, and that runs from around 141.50 up to around 141.70.

USD/JPY Hourly Price Chart

usdjpy hourly chart

Chart prepared by James Stanley; USD/JPY on Tradingview

EUR/JPY Triangle Break, Pullback, Breakout

When I had looked into the Yen in the Analyst Pick a few weeks ago, EUR/JPY was sitting in the middle of a symmetrical triangle formation. This despite the meltdown in EUR/USD that saw the major pair pushing into the parity psychological level.

That formation has since been dealt with by bulls: Buyers pushed up to resistance in late-August, with a breakout into the September open. That breakout pulled back – found support at prior resistance, right around the same 138.84 Fibonacci level that I was using whilst price was still in the triangle, and that’s led to another extension of the move with a fresh monthly high.

At this point, prior resistance now becomes support – and this is in the red zone in the below chart, plotted around the 140.00 psychological level which is confluent with the 61.8% Fibonacci retracement as well as that prior swing high.

EUR/JPY Eight-hour Price Chart

eurjpy eight hour chart

Chart prepared by James Stanley; EUR/JPY on Tradingview

GBP/JPY

When I looked into these same Yen pairs a few weeks ago, all of EUR/JPY, GBP/JPY and AUD/JPY were in consolidation as shown by symmetrical triangles. As looked at above, EUR/JPY has broken out and as I’ll look at below, AUD/JPY has done the same.

GBP/JPY, however, has been slacking. Price remains within the symmetrical triangle although the past two days have been especially strong, with price action traversing the entirety of the formation following a support test yesterday that’s led to a resistance test today.

The natural inclination on something like this would often be to focus on bearish scenarios in GBP/JPY, given the deduction that this is one of the few pairs that hasn’t yet yielded to fresh highs. But, this would need some work given how strong this move has priced-in and, shorter-term, there’s a possibility of higher-low support at prior resistance, inside of the triangle, which keeps the door open for bullish themes.

For bears to take back control, I’d likely want to see a breach of the 159.46-160.00 support zone. But, as can be seen on the below chart, there’s a shorter-term trendline inside of the triangle which was prior resistance. This plots in around a group of swing-highs which makes for a potential support zone from around 162.50 up to 163.25.

GBP/JPY Daily Chart

gbpjpy daily chart

Chart prepared by James Stanley; GBP/JPY on Tradingview

AUD/JPY

This move has been brewing for a long time…

This goes back to last February, when at the time AUD/JPY had set up an inverse head and shoulders pattern with a neckline around the 80.00 psychological level. And from long-term charts, that potential remains, with price edging up for another test of a significant spot of price action resistance around the 97.50 psychological level.

From the monthly chart below – notice the six-month-struggle that’s shown at the 95.00 handle. All of those extended wicks on the monthly chart highlight struggle as bulls were trying to push to fresh highs but were continually being offset by bears. Now – it appears that bulls have started to break fresh ground with near-term trends.

AUD/JPY Monthly Chart

audjpy monthly chart

Chart prepared by James Stanley; AUD/JPY on Tradingview

When I looked at the pair a few weeks ago, another breakout was setting up with price holding around that 95.00 level. That led to a slow but consistent grind above the big figure, with last week showing support around that level combined with a hold above prior trendline resistance.

That’s led to another push and a fresh three-month-high in the pair. The next zone of resistance above is the same zone that bulls did not want to test in June – and it runs off of those prior swing highs from May of 2015. This plots at 97.30, with 96.88 showing as the current seven-year-high.

Collectively, this makes for a price zone to look for that next resistance test in AUD/JPY. A test and hold there opens the door for support at prior resistance, at either 95.76 or 95.00.

AUD/JPY Daily Price Chart

audjpy daily chart

Chart prepared by James Stanley; AUD/JPY on Tradingview

--- Written by James Stanley, Senior Strategist, DailyFX.com & Head of DailyFX Education

Contact and follow James on Twitter: @JStanleyFX

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

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