USD/JPY: Technical outlook and review...

FX:USDJPY   U.S. Dollar / Japanese Yen
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Following a very close shave with weekly demand at 105.19-107.54 two weeks back, price extended over 300 pips higher last week. As a result, weekly resistance at 110.09 (now acting support) was taken out, ending with the market closing around the underside of weekly supply (113.80-111.59) at 111.78. So with this in mind, we could witness some sort of a sell-off this week.

Casting our lines down into the daily chart , one can see that it was actually Friday’s trading that boosted gains for this pair, rallying a whopping 234 pips on the day. This move saw price wipe out resistance coming in at 110.96 (now acting support) and potentially open up the gates for this market to challenge supply at 113.80-113.16 (positioned within the extremes of the above said weekly supply). Fundamentally, this surge in buying came about following reports that the BoJ may announce negative interest rates at its next meeting.

Consequent to Friday’s aggressive move north, H4 action wrapped up the week just ahead of psychological resistance 112.00. Owing to price trading at a weekly supply zone (see above) right now, shorting from 112.00 or even the H4 mid-level hurdle 112.50 is certainly a possibility as long as one is patient enough to wait for the lower timeframes to confirm strength resides here. Reason being is let’s not forget that the daily picture shows price relatively free to head higher into weekly supply (see above).

As far as we see things, the ideal place to be looking for shorts this week, however, would be between 113.00 and the H4 Quasimodo resistance level at 113.68, since this area is located within both the weekly and daily supplies we mentioned above. We consider this to be an extreme price point so a relatively strong push south is expected from here!

Levels to watch/live orders:

• Buys: Flat (Stop loss: N/A).
• Sells: 112.50/112.00 region Tentative – confirmation required (Stop loss: dependent on where one confirms this area). 113.68/113.00 region Tentative – confirmation required (Stop loss: dependent on where one confirms this area).
Good work!
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