ICmarkets

USD/JPY: Technical outlook and review...

FX:USDJPY   U.S. Dollar/Japanese Yen
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Weekly Timeframe: Last week saw the market print a nice-looking bearish pin bar candle near the upper limits of a compressed symmetrical triangle. All of this has formed in between a major weekly swap level seen at 115.50 and a weekly Quasimodo resistance level visible at 122.18.

Daily Timeframe: Following Wednesday’s break of the daily supply area seen at 119.95-119.14, price sold off for the remainder of the week down to a small daily decision-point demand area coming in at 118.32-119.09. In the event that the buyers can hold out within this area, further upside may well be seen on the USD/JPY             pair this week. Let’s take a look at what the 4hr timeframe has to say about this…

4hr Timeframe: The 4hr timeframe shows that crammed trading action             was seen on Friday between the 119.00 barrier and a small 4hr demand area seen at 118.32-118.54 (located deep within the aforementioned daily decision-point demand area). A break below this 4hr demand area would likely clear the path south down towards a 4hr swap level visible at 117.86.

Selling with lower timeframe confirmation on the break and retest of the aforementioned 4hr demand area is something we may be interested participating in this week for the following reasons:

• Selling on the retest provides a profit gap of around 68 pips down to 117.86 (the 4hr swap level just mentioned above).
• A break below the aforementioned 4hr demand area would at the same time likely clear buying opposition from the aforementioned daily decision-point demand area as well, thus freeing the path south for further selling down towards a daily demand area seen at 116.86-117.54, seen a little below 117.86.
• The weekly chart is currently showing price trading around the upper limits of a symmetrical triangle, thus giving us extra confidence that resistive pressure may well be seen in the market this week.

Conversely, a break above 119.00 could potentially force the market to test immediate resistance coming in at 119.35. With regards to buying this pair, our team has come to a general consensus that longs will only be considered if/when price breaks above the 4hr swap level seen at 119.35, since buying on the break of 119.00 would not provide enough room for us to take the profits we’re looking for.


hello how do you know where the swap levels are located? thanks
Reply
Hi FXviper,

A swap level is simply a support turned resistance and vice versa, they can be found on all timeframes..

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