USD/JPY Forex Technical Analysis – Aggressive Counter-Trend Buyers Targeting 109.223 – 109.634

The Dollar/Yen is trading higher on Wednesday, continuing to recover from a more-than-one-month low hit late last week. After a 17-day sell-off, traders are squaring positions ahead of the Federal Reserve’s interest rate and policy decisions, due to be released at 18:00 GMT.

On Wednesday, the U.S. central bank is widely expected to maintain its policy settings and Fed Chairman Jerome Powell is seen as likely to repeat his dovish message. But some analysts say signs of rising inflation expectations could nudge the Fed to abandon its rhetoric that a policy tightening is still a long way off. In my opinion, this would be a major surprise.

At 06:00 GMT, the USD/JPY is trading 108.875, up 0.130 or +0.12%.


Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through 107.479 will signal a resumption of the downtrend. The main trend will change to up on a move through 110.966.

The minor trend is also down. A trade through 109.961 will change the minor trend to up. This will also shift momentum to the upside.

The long-term range is 111.715 to 102.593. Its retracement zone at 107.154 to 108.230 is support. This zone stopped the selling at 107.479 on April 23.

The minor range is 109.961 to 107.479. The USD/JPY is currently testing its pivot at 108.720.

The short-term range is 110.966 to 107.479. Its retracement zone at 109.233 to 109.634 is the primary upside target. Since the main trend is down, sellers are likely to come in on the first test of this area.

Daily Swing Chart Technical Forecast

The direction of the USD/JPY on Wednesday is likely to be determined by trader reaction to the 50% level at 108.720.

Bullish Scenario

A sustained move over 108.720 will indicate the presence of buyers. If this move creates enough upside momentum then look for the buying to possibly extend into the short-term retracement zone at 109.223 to 109.634.

Watch for sellers on the first test of 109.223 to 109.634. They are going to try to form a potentially bearish secondary lower top.

Bearish Scenario

A sustained move under 108.720 will signal the presence of sellers. This could trigger a pullback into 108.230. Aggressive counter-trend buyers could come in on this break. They will be trying to form a potentially bullish secondary higher bottom.

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Published by

James Hyerczyk

James A. Hyerczyk has worked as a fundamental and technical financial market analyst since 1982. His technical work features the pattern, price and time analysis techniques of W.D. Gann.