The Dollar/Yen fell on Wednesday, erasing most of the gains from the previous session after the U.S. Treasury bond yield curve inverted for the first time since 2007 and investors, signaling a potential recession in perhaps 22 months, according to historical data. The news triggered a steep drop in U.S. equity markets, which drove investors into the perceived safety of the Japanese Yen.
On Wednesday, the USD/JPY settled at 105.911, down 0.833 or -0.78%.
Daily Technical Analysis
The main trend is down according to the daily swing chart. The Forex pair is in no position to change the main trend to up, but a trade through 105.049 will signal a resumption of the downtrend.
The minor trend is also down. A trade through 107.086 will change the minor trend to up. This will also shift momentum to the upside.
The minor range is 105.049 to 106.976. Its 50% level or pivot at 106.013 is controlling the short-term direction of the USD/JPY.
The main range is 109.317 to 105.049. If the minor trend changes to up then its retracement zone at 107.183 to 107.687 will become the primary upside target.
Daily Technical Forecast
Based on Wednesday’s price action and the close at 105.911, the direction of the USD/JPY is likely to be determined by trader reaction to the minor pivot at 106.013.
A sustained move under 106.013 will indicate the presence of sellers. Crossing to the weak side of an uptrending Gann angle at 105.799 will indicate the selling is getting stronger. This could drive the USD/JPY into a pair of uptrending Gann angles at 105.424 and 105.237.
The angle at 105.237 is the last potential support angle before the 105.049 main bottom. If this fails, the selling may extend into the March 26, 2018 main bottom at 104.600.
A sustained move over 106.013 will signal the presence of buyers. This could lead to a surge into an uptrending Gann angle at 106.549, followed by a downtrending Gann angle at 106.817.
We’re in a news driven market so don’t be surprised by two-sided volatility.
This article was originally posted on FX Empire
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