Japanese Yen Technical Analysis: USD/JPY, EUR/JPY, GBP/JPY

Japanese Yen, USD/JPY Talking Points:

• After a strong breakout to start the week, bears have been clawing back in USD/JPY and the weekly bar is currently showing as a gravestone doji.
• For Yen-strength, EUR/JPY can remain a more attractive venue and for Yen-weakness, GBP/JPY a more amenable backdrop.
• I’ll be looking into all three markets in tomorrow’s webinar and you’re welcome to join. Click here to register.

USD/JPY made a large move on Monday to start the week and since then it’s been mostly clawing back by bears. This takes place at a big spot on the weekly chart as the same trendline that’s held the highs for the past two weeks – which was also leading into a bounce on Wednesday – remains in-play as we push into Friday trade.

All hope is not lost for bulls at this point as it’s the 145 level that looms large. This was resistance-turned-support over the past two weeks and that remains an item of interest as we wind towards the end of the week.

If we do see sellers continue the late-week move to finish the weekly bar in the red, this will take on the form of a shooting star after a failed breakout at 148.00. But, if looking for Yen-strength, there may be a more attractive setup elsewhere which I’ll look at in a moment.

 

USD/JPY Weekly Chart

Chart prepared by James Stanley; data derived from Tradingview

 

USD/JPY Daily

 

Despite the three-day sell-off an argument can still be made of higher-highs and lows, and that’s largely because of last week’s support hold at 145.00 on Friday. This sets up that price as a contentious spot into the end of this week, as sellers closing the weekly candle below that not only shows a break of the higher-highs and lows sequence, but a weekly shooting star formation as noted above.

USD/JPY Daily Price Chart

Chart prepared by James Stanley; data derived from Tradingview

 

EUR/JPY

 

If looking for Yen-strength, I’m still partial towards EUR/JPY and this week is showing yet another failure from bulls at the 163.00-163.38 resistance zone.

The week started with Yen-weakness here, as well, but while USD/JPY is still showing a green weekly bar (as is GBP/JPY, as of this writing), EUR/JPY has already pushed into red territory for the week with what looks like both a bearish pin bar and a shooting star formation.

Longer-term, there’s also a descending triangle formation in here, although support for that is all the way down around the 155.00 level, and we’re still within the confines of longer-term digestion so it would be a bit early to start speculating on a break of the broader formation. But – the 160.00 level held the lows in March and April and this remains a key spot if JPY-bulls continue to push.

 

EUR/JPY Weekly Price Chart

Chart prepared by James Stanley; data derived from Tradingview

 

GBP/JPY

 

For JPY-weakness, I think GBP/JPY still carries more attraction than USD/JPY, and at the present the pair is testing a major area on the chart. I’m going to have to start off with the monthly chart to explain.

 

GBP/JPY Monthly Chart

Chart prepared by James Stanley; data derived from Tradingview

 

There was a sizable gap produced by the Financial Collapse back in 2008 in GBP/JPY that continues to carry some weight today. The month of August 2008 saw GBP/JPY close at 198.08, but then September opened almost 500 pips lower, at 193.61.

The bottom of that gap came into play as resistance in 2015, holding the highs over a three-month stretch until a reversal ultimately could take over. But more recently, this has been a constant force in GBP/JPY price action after showing as resistance last March. It remains a notable item of contention today, after having shown as resistance over the past two weeks and, from the weekly chart below, a possible third week of resistance, as well.

 

GBP/JPY Weekly Chart

Chart prepared by James Stanley; data derived from Tradingview

 

GBP/JPY

 

The daily chart paints a slightly different picture as the upper wick on the weekly instead shows with more granularity, from two days of strength followed by two days of weakness; but, at this point, it’s also an illustration of possible support at prior resistance. There’s also more room for bulls to breathe, as last week’s swing low is all the way down around 190.31, setting the stage for support potential at prices such as 192.64 or perhaps even 191.67.

 

GBP/JPY Daily Chart

Chart prepared by James Stanley; data derived from Tradingview

 

--- written by James Stanley, Senior Strategist