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USD/JPY Weekly Technical Perspective: Dollar Bulls Poised to Take Over

USD/JPY Weekly Technical Perspective: Dollar Bulls Poised to Take Over

2018-09-09 02:00:00
Peter Hanks, Analyst
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Technical Forecast for the Japanese Yen: Bearish

Japanese Talking Points:

  • Bulls resisted a break below the March trend line on Thursday and Friday despite significant fundamental developments
  • The trend line offers bulls an entry point to try and push higher
  • 112.0 is the last point of resistance before the pair can test levels near July highs

Dollar Yen Unchanged from Last Week

Since last we looked at USD/JPY, the technical landscape has changed slightly. Two weeks ago, a bullish case for the dollar was made and this week’s price action looks to support that claim once more. Despite some fundamental developments, specifically talk of a US-Japanese trade war, the dollar pushed higher Friday. After last weeks mixed technical outlook, USD/JPY is set to close Friday effectively unchanged from last week around 111.09

USD/JPY Price Chart 60-Minute Time Frame, August 31st – September 7th

USD/JPY Weekly Technical Perspective: Dollar Bulls Poised to Take Over

In the short term, it looks like dollar bulls could gain control and continue the run higher from March as the climb starting in March now acts as a fairly robust resistance level for the dollar. For example, significant fundamental developments led bears to test the line on Friday but bulls stood firm and kept the dollar above support until close. With the pair resting on the trend line heading into the weekend, an open above support next week should lend bulls the confidence to take over.

Resistance Moving Forward

Should bulls take over, there are a few resistance levels that will need to be passed before driving higher still. First is the 50% fib level roughly around 111.40. Another point of resistance is the round and psychological 112.0 level.

In the past, 112 has offered some moderate resistance but is not nearly as pivotal as a level like 110. With that in mind, 112 is certainly a point to watch but is likely not strong enough to spur a major reversal.

USD/JPY Price Daily Time Frame, Year-to-Date

USD/JPY Weekly Technical Perspective: Dollar Bulls Poised to Take Over

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Turning to client positioning, the landscape for USD/JPY is also little different from last week. 53% of traders remain long while 47% remain short.

USD/JPY Weekly Technical Perspective: Dollar Bulls Poised to Take Over

Despite the mixed sentiment, look for the dollar to trade higher versus the yen next week. Support outweighs resistance at this level and the trend line from March offers ongoing support as price consolidates above.

--Written by Peter Hanks, Junior Analyst for DailyFX.com

Contact Peter on Twitter at @PeterHanksFX

DailyFX forecasts on a variety of currencies such as the US Dollar or the Yen are available from the DailyFX Trading Guides page. If you’re looking to improve your trading approach, check out Traits of Successful Traders. And if you’re looking for an introduction to the Forex market, check out our New to FX Guide.

Other Technical Forecast:

Australian Dollar Forecast: AUD/USD Cleared to Descend to 2016 Lows as Key Support Gives Way

US Dollar Forecast: Dollar Best Hope to Stave Off Head-and-Shoulders Breakdown is a Euro Drop

Equity Forecast: DAX at Critical Support, CAC 40 Hold Summer Lows For Now

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

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