USD/JPY: consolidation will be replaced by growth

Current trend

In January, the long-term decline in the US currency against the Japanese yen has been replaced by a side, broad consolidation.

In early February, the pair broke through the upper boundary of the downward channel and withdrew from the trend, but, having failed to overcome the key resistance level of 110.50, returned to local lows of 108.15, 108.45 and consolidated above them. The catalyst for this movement was a significant increase in demand for the dollar due to the release of favorable data for the US.

In the second half of the trading week, high volatility is not expected due to the lack of key releases for the US and Japan.

Support and resistance

In the short term, further sideward consolidation movement in the narrowing channel is expected. In the future, the pair will determine the direction of motion. There is a great probability of a downward trend breaking and a transition to an upward trend in the medium term with targets of 111.00, 111.50. An alternative scenario is the consolidation of the downward movement with the target of 107.30, a local minimum for the last year and a half, after which a reversal of a downward trend.

Technical indicators on D1 chart keep the falling signal, MACD points to a high volume of long positions in the pair, and Bollinger Bands are directed downwards.

Support levels: 108.45, 108.15, 107.75, 107.30, 107.00, 106.50.

Resistance levels: 109.00, 109.55, 110.50, 111.00, 111.50, 111.75, 112.00.

Trading tips

In this situation, long positions may be opened from the current level with the target at 109.85 (111.00, 111.50 in the medium term) and the stop-loss at 108.30.

US Dollar vs Japanese Yen

Buy Sell Spread
109.195 109.173 22

Scenario

Timeframe Day’s Range
Recommendations BUY
Entry Point 109.07
Take Profit 109.85
Stop Loss 108.30
Support levels 106.50, 107.00, 107.30, 107.75, 108.15, 108.45, 109.00, 109.55, 110.50, 111.00, 111.50, 111.75, 112.00

USD/JPY: consolidation will be replaced by growth

The material published on this page is produced by the Claws&Horns Company and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC; furthermore it has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

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