USD/JPY Technical Forecast: Neutral/Bearish
- Rocket higher brought into play familiar resistance
- Outlook is tough to gauge, but there are signposts to watch
Last week on Monday USD/JPY exploded on Pfizer vaccine news just as it looked poised to trade lower, possibly soon testing the March low near 101. But with the explosive move higher a familiar line of resistance was brought into play via a trendline dating back to the very beginning of July.
This line keeps the trend, albeit a choppy one, intact to the downside. The sequence of lower lows and lower highs continues to keep sellers somewhat in control. If perhaps in the week ahead we can see a hold on weakness that turns into a higher low, then we might also see the trend-line challenged.
A break higher above the July trend-line might not do much good in turning momentum around, as a trend-line from March is riding lower near the 106 mark. In the upper 10600s lies the 200-day moving average, a threshold given the current environment feels like a long way up.
Generally, the outlook for the next week doesn’t appear too promising from a risk/reward perspective so it may be most prudent to lay low until further clarity.
USD/JPY Daily Chart (Line of resistance, trend lower)
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---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX
