Talking Points:
- USD/JPY Technical Strategy: recent breakdown below H4 Ichimoku Cloud is worrisome for Bulls
- USD/JPY Stuck Within Bull-Flag Formation Following Lackluster NFP
- Swing Outlook: USD/JPY Technical Analysis Purposefully Playing to Lose
A short-term outlook on USD/JPY should show that the Bulls are not out of the woods yet. US Yields pushed higher after Non-Farm Payroll on Friday, which helped USD/JPY push higher on USD extending gains. However, despite the rise in yields where the 2yr pushed above 1.20%, there could still be downside risk in USD/JPY from a technical perspective.
The key level to watch at the close of trading in the first week of 2017 remains the 61.8% of the range for this week that stretches from 118.60 down to 115.07 at 117.259. If price remains below this zone, we could be seeing a deep retracement of the first key move lower that could extend lower. Should this level hold and a downside move resume, we should keep an eye on the price continuing to move lower with the highlighted range on the chart to the lower levels we focused on earlier this week near 114.85/50 and the lower target near 112.
Only if price breaks above this zone could we comfortably see the downward move behind us and looking to resume was it presumed to be a strong bullish move in Q1 2017 for USD/JPY. A Bull Flag breakout would take place on a move above the 78.6% retracement of the zone at 117.854.
H4 USD/JPY Chart: USD/JPY Breaks Below Ichimoku Cloud, Trading Within Falling Channel
Chart Created by Tyler Yell, CMT, Courtesy of TradingView
Shorter-Term USD/JPY Technical Levels: January 6, 2017
For those interested in shorter-term levels of focus than the ones above, these levels signal important potential pivot levels over the next 48-hours.
