USD/JPY Forex Technical Analysis – Will Buyers Defend Uptrend on Test of 105.619 – 105.282?

The Dollar/Yen is plunging early Tuesday as investors continue to position themselves ahead of the release of the Fed minutes on Wednesday. Furthermore, now that the massive Treasury auction, which took place last week, is over, yields are starting to fall again, tightening the spread between U.S. and Japanese interest rates, while making the U.S. Dollar a less desirable investment.

At 06:08 GMT, the USD/JPY is trading 105.603, down 0.398 or -0.38%.

Fundamentally, weak data and uncertainty ahead of a week that includes minutes of the U.S. Federal Reserve’s last policy meeting and the U.S. Democratic Party’s nomination convention kept a lid on sentiment.


Daily Short-Term Technical Analysis

The main trend is up according to the daily swing chart. A trade through 105.301 will change the main trend to down. A move through 107.049 will signal a resumption of the uptrend.

The short-term range is 105.301 to 107.049. Its retracement zone at 105.969 to 106.175 is potential resistance.

The intermediate range is 104.189 to 107.049. Its retracement zone at 105.619 to 105.282 is the next downside target.

Daily Short-Term Technical Forecast

Based on the early price action and the current price and 105.603, the direction of the USD/JPY the rest of the session on Tuesday is likely to be determined by trader reaction to the intermediate 50% level at 105.619.

Earlier in the session, the USD/JPY took out a short-term Fib level at 105.969 and plunged into the 50% level at 105.619. Even with the main trend up, buyers passed on the opportunity to buy the test of the first retracement zone, setting up the move into the second retracement zone.

The retracement zone at 105.619 to 105.282 is very important because it is the last potential support zone before the 105.301 main bottom.

If this bottom fails, the trend will change to down. Furthermore, the daily chart indicates there is plenty of room to the downside so taking out the Fibonacci level at 105.282 could trigger an acceleration to the downside with the nearest support the July 31 main bottom at 104.189.

Since the main trend is up, watch for buyers to show up on a test of 105.619 to 105.282. If momentum shifts back to the upside then look for an intraday rally to possibly extend into 105.969 to 106.175.

However, if 105.282 fails to hold then look out to the downside.

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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.