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USD/JPY Forex Technical Analysis – Buyers Targeting 108.478 Main Top

James Hyerczyk

The Dollar/Yen is trading higher early Tuesday as the upside momentum continues due to the favorable interest rate differential between U.S. Government bond yields and Japanese Government bond yields. The price action suggests that investors are expecting the U.S. Federal Reserve to hit the pause button on a rate cut at its October 29-30 policy meeting and for the Bank of Japan to cut rates and provide other forms of stimulus.

At 03:36 GMT, the USD/JPY is trading 108.219, up 0.157 or +0.14%.


Daily Technical Analysis

The main trend is down according to the daily swing chart. However, momentum is trending higher. A trade through 108.478 will change the main trend to up. A move through 106.963 will signal a resumption of the downtrend.

The short-term range is 108.478 to 106.963. Its retracement zone at 107.899 to 107.721 is potential support. Trading on the strong side of this zone is helping to generate an upside bias.

The main range is 109.317 to 104.463. Its retracement zone at 107.463 to 106.890 is the key support controlling the near-term direction of the Forex pair.

Daily Technical Forecast

Based on the early price action and the current price at 108.219, the direction of the USD/JPY the rest of the session on Tuesday is likely to be determined by trader reaction to the downtrending Gann angle at 107.713.

Bullish Scenario

A sustained move over 107.713 will indicate the presence of buyers. If this creates enough upside momentum then look for the rally to possibly extend into the main top at 108.478, followed by another downtrending Gann angle at 108.645. This is the last potential resistance angle before the 109.317 main bottom.

Bearish Scenario

A sustained move under 107.713 will signal the presence of sellers. This could trigger a labored break with potential support levels coming in at 107.899, 107.721 and an uptrending Gann angle at 107.713. This is a major support angle.

If 107.713 fails then we could see the start of a near-term correction. The first target is 107.463. If this fails then look for an acceleration to the downside with potential targets coming in at 106.963 and 106.890.

This article was originally posted on FX Empire