U.S. Markets closed

USD/JPY Forex Technical Analysis – 108.235 Potential Trigger Point for Downside Acceleration

James Hyerczyk

The Dollar/Yen is trading slightly lower on Monday with the Japanese market closed due to a bank holiday. We’re probably looking at profit-taking following last week’s solid performance following the announcement of the partial trade deal between the United States and China. Higher Treasury Note futures (lower rates) are also contributing to weaker Forex pair.

At 05:40 GMT, the USD/JPY is trading 108.318, down 0.110 or -0.10%.

The early trade suggests a “buy the rumor, sell the fact” move may be developing. This doesn’t mean the trend is down, but aggressive profit-taking could contribute to a 50% to 61.8% retracement of the last rally.


Daily Technical Analysis

The main trend is up according to the daily swing chart. The main trend changed to up on Friday when buyers took out the previous main top at 108.405. The main trend changes to down on a move through 106.485.

The main range is 109.317 to 104.463. Its retracement zone at 107.463 to 106.890 is support.

Daily Technical Forecast

Based on the early price action and the current price at 108.318, the direction of the USD/JPY on Monday is likely to be determined by trader reaction to the uptrending Gann angle at 108.235.

Bullish Scenario

A sustained move over 108.235 will indicate the presence of buyers. The first upside target angle comes in at 108.505, followed closely by 108.626.

Overtaking 108.626 will signal a resumption of the uptrend. This could lead to a test of the uptrending Gann angle at 107.360.

Crossing to the strong side of the angle at 107.360 will put the USD/JPY in a position to challenge the August 1 top at 109.317.

Bearish Scenario

A sustained move under 108.235 will signal the presence of sellers. This could trigger the start of an acceleration to the downside with the next target angle coming in at 107.463 to 107.360.

Side Notes

Basically, Monday’s session begins with the USD/JPY inside a small triangle, formed by a downtrending Gann angle at 108.505 and an uptrending angle at 108.235.

The triangle chart pattern tends to indicate volatility to start preparing for a breakout move. Also start watching for increased volume as this will be necessary to verify the breakout.

This article was originally posted on FX Empire