USD/JPY Forex Technical Analysis – Sustained Rally Over 109.930 Means Buying is Real
The Dollar/Yen is trading higher early Tuesday as demand for safe-haven assets continued to drop, amid signs of goodwill between China and the United States, as the two economic powerhouses prepared to sign a truce in their trade war. Investor sentiment was also boosted after the U.S. Treasury Department on Monday said China should no longer be designated a currency manipulator – a label it applied as the Yuan dropped in August.
At 06:07 GMT, the USD/JPY is trading 110.088, up 0.149 or +0.14%.
Daily Swing Chart Technical Analysis
The main trend is up according to the daily swing chart. The trend turned to up on Monday when buyers took out three main tops at 109.706, 109.728 and 109.930. The latter was posted on May 30, 2019 so the move was significant.
The uptrend is safe for now with the nearest main bottom coming in at 107.651. This low was created on January 8 when tensions between the United States and Iran started to ease.
The nearest support is the Fibonacci level at 109.361. This is a long-term retracement level so breaking out above it is significant. It’s also creating a strong upside bias.
Daily Swing Chart Technical Forecast
Early Tuesday, the USD/JPY is posting a solid rally with an intraday high coming in at 110.214. The next major upside target is the May 21, 2019 main top at 110.677.
The early support is the former top at 109.930. The USD/JPY will remain strong if traders provide support at this level.
A break below 109.930 will indicate the buying is getting weaker. This could lead to a test of the other former tops at 109.728 and 109.706.
The biggest fear for USD/JPY bulls should be a close under 109.938. A close under this level will produce a closing price reversal top. It won’t change the trend, but it will indicate that the selling is greater than the buying at current price levels. It will also signal that the breakout was likely fueled by buy stops rather than aggressive buying.
This article was originally posted on FX Empire
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