USD/JPY: Tech report...
Underpinned by a weekly support area at 111.44-110.10, the bulls are showing signs of recovery. Providing that this continues, there’s potential for price to challenge the supply zone seen at 115.50-113.85. Down on the daily timeframe, however, the unit is seen trading within a resistance area coming in at 111.35-112.37. The pair is likely to find some resistance here with the zone having been a strong barrier of support on a number of occasions in the past.
With US yields rallying north and the DOW 30 punching to a fresh high of 20753 yesterday, the H4 candles broke through the mid-level resistance at 111.50 and closed just ahead of the 112 handle. Seeing as how price is close to testing 112 and the fact that daily price is seen within a resistance area right now, we would refrain from entering into a buy position just yet.
Our suggestions: A close above 112, followed by a retest as support and a reasonably sized H4 bull candle is, we believe, enough to justify a long position, targeting February’s opening line at 112.77 as an initial take-profit zone. Granted, this setup would entail buying into the upper edge of the daily resistance area, but given the strength seen from the weekly support area at present coupled with a (possible) close above 112, we feel a long is worth the risk.
Data points to consider: US Core PCE data at 1.30pm, FOMC Dudley speaks at 2pm as well as FOMC member Kashkari speaking at 3pm GMT.
Levels to watch/live orders:
• Buys: Watch for price to engulf 112 and look to trade any retest seen thereafter (waiting for a reasonably sized H4 bull candle to form following the retest is advised, stop loss: ideally beyond the candle’s rejection tail).
• Sells: Flat (stop loss: N/A).
With US yields rallying north and the DOW 30 punching to a fresh high of 20753 yesterday, the H4 candles broke through the mid-level resistance at 111.50 and closed just ahead of the 112 handle. Seeing as how price is close to testing 112 and the fact that daily price is seen within a resistance area right now, we would refrain from entering into a buy position just yet.
Our suggestions: A close above 112, followed by a retest as support and a reasonably sized H4 bull candle is, we believe, enough to justify a long position, targeting February’s opening line at 112.77 as an initial take-profit zone. Granted, this setup would entail buying into the upper edge of the daily resistance area, but given the strength seen from the weekly support area at present coupled with a (possible) close above 112, we feel a long is worth the risk.
Data points to consider: US Core PCE data at 1.30pm, FOMC Dudley speaks at 2pm as well as FOMC member Kashkari speaking at 3pm GMT.
Levels to watch/live orders:
• Buys: Watch for price to engulf 112 and look to trade any retest seen thereafter (waiting for a reasonably sized H4 bull candle to form following the retest is advised, stop loss: ideally beyond the candle’s rejection tail).
• Sells: Flat (stop loss: N/A).
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