USD/JPY: technical outlook

FX:USDJPY   U.S. Dollar / Japanese Yen
192 0 8
Supported by a rally in the Nikkei from H4 range support at 16475 and a sturdy-looking daily demand base at 108.38-109.39 on the USD/JPY             (green circle), the U.S. dollar rallied beautifully from a H4 trendline support yesterday taken from the low 108.22. Erasing all of Monday’s losses, the pair is now seen trading above the 110 handle, just ahead of a H4 Quasimodo resistance line at 110.38.

With the H4 chart in mind, how do things stand over on the higher-timeframe picture? Well, weekly action continues to gravitate in the direction of a weekly supply zone given at 113.80-111.59. Meanwhile, lower down the scale, daily price shows room to advance north up to daily resistance seen at 110.96, which fuses nicely with a daily trendline resistance from the high114.44.

Our suggestions: According to the higher timeframes, buying this market is likely the best bet for the time being. Nevertheless, with the H4 Quasimodo line seen at 110.38 obstructing the path north, we are going to pass on any buys today. What we are interested in, however, is the 111.00/110.84 zone (round-number 111.00, daily resistance at 110.96 and H4 resistance at 110.84) for sell opportunities. Despite this collection of resistances seen here, we would still require lower timeframe confirmation (see the top of this report for ideas on how to find confirmation). The reason being is, as we mentioned above, weekly action could very well continue north up to the underside of the above said weekly supply – essentially the H4 mid-way resistance 111.50.

Levels to watch/live orders:

• Buys: Flat (Stop loss: N/A).
• Sells: 111.00/110.84 region Tentative – confirmation required (Stop loss: dependent on where one confirms this area).
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