USDJPY Weekly Technical Perspective: Technical Signals Mixed After Failed Breakout Follow-Through
Technical Forecast for the Japanese Yen: Mixed
- USDJPY posted a slight loss this week, influenced by fundamental desire for a safe haven
- Sentiment remains mixed, with 56% long and 44% short
- The pair traded above 111.50, the 50% fib level, briefly this week before fundamentals altered price action
Last week, when we discussed the technical perspective of the dollar-yen the pair looked primed to stage a climb higher. Breaking out of a downward trend, the dollar pressed higher on Tuesday and Wednesday with multiple layers of support beneath. Unfortunately for traders who were long, the pair seems to have been overcome with fundamental news and the trek higher was retraced Thursday. Still, the pair remains above support levels highlighted in previous articles offering a slight bullish bias. However, the bias is unlikely to act as actionable evidence in a trade.
USD/JPY Price 60-Minute Time Frame, July 2018 - Present
Thursday offered the most significant move for the pair as the yen traded higher, retracing the gains posted by the dollar early in the week. Still, the pair traded slightly below 111 late Friday and looked poised to close well above the lows from last week. Early this week, the 111 level lent some support to the dollar. Friday’s close will be an important indication of where the pair is likely to head Monday. Should it close above 111, a race back to test 111.50 would be likely as bulls seek to continue the larger uptrend from April.
Furthermore, the pair closed above the 50% fib level at 111.50 on Wednesday. A close at this level suggests bulls were firmly in control until Thursday’s developments.
USD/JPY Price Chart 24-Hour Time Frame, April – Present
It could be argued the current levels are part of a larger pull-back before pressing higher from the breakout, but mixed sentiment and fundamental themes muddy any attempt at making a solid technical conclusion. For this reason, the technical perspective for the dollar yen is mixed and the close on Friday should be watched for insight on next week’s open.
Other Weekly Technical Forecasts:
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--Written by Peter Hanks, Junior Analyst for DailyFX.com
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.