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Japanese Yen Technical Analysis: Range Top Looks Tough For Bulls

Japanese Yen Technical Analysis: Range Top Looks Tough For Bulls

David Cottle, Analyst


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Japanese Yen Technical Analysis Talking Points:

  • USD/JPY is inching higher once again
  • However impetus is lacking and a renewed downside test may be on the cards
  • GBP/JPY may be topping out also

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The Japanese Yen remains mired against the US Dollar on its daily technical chart, but USD/JPY bulls have yet to challenge seriously the top of that pair’s established trading range. That top comes in at 111.83, a point which has drained bullish enthusiasm on a daily closing basis since July 20.

Range Holds. US Dollar Vs Japanese Yen, Daily Chart

Clearly, that is going to have to change if the pair is to progress, with the previous significant peak in sight if it does. That was July 18’s 113.21, a level matching this year’s top. That was made in January as a hangover from the climb seen up the peaks of December 2017.

So much for upside targets. However, there are perhaps reasons to suspect that a test lower is more likely. The 20-day moving average recently crossed below the 50-day, a switch which can often herald a down-move. That said momentum indicators do not back up this prospect unequivocally by any means. Indeed, the USD/JPY Relative Strength Index suggesting neither significant overselling or buying now.

Still, the pair is holding firm around 111.15. That level is is notable as the first, 23.6% Fibonacci retracement of the rise up from the lows of late March to that July peak.

Retracements Offer Key Support. US Dollar Vs Japanese Yen With Fibonacci Levels Shown.

It has risen quite sharply above that support point this week but it is obvious from that chart that these retracements matter strongly in current USD/JPY daily-chart moves. A slip below 111.15, ill bring the 38.2% point into focus, and that isexactly where the pair bounced back in late July.

Meanwhile GBP/JPY has also made some progress to the upside with the UK Pound supported against the Japanese Yen and much else on a fundamental basis by hopes that a Brexit deal may be in sight. Still, with British parliamentarians deadlocked about any settlement, there is still a long way to go and gains on this score would seem very fragile.

Fading Rally? UK Pound Vs Japanese Yen. Daily Chart

Technically speaking the rise they have produced appears to be topping out short of the cross’s previous peak. That was late August’s 145.63. If this cannot be convincingly topped then a retest of recent lows in the mid-143.20s looks likely with August 15’s low of 1139.88 lurking below them.

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--- Written by David Cottle, DailyFX Research

Follow David on Twitter @DavidCottleFX or use the Comments section below to get in touch!

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