USD/JPY technical outlook appears bullish
Fawad Razaqzada September 5, 2019 2:14 PM
Sentiment has been boosted in part because of US-China trade optimism and receding no-deal Brexit risks.
The USD/JPY has broken above last week’s high today, thanks to positive sentiment towards risk assets in general. Sentiment has been boosted in part because of US-China trade optimism and receding no-deal Brexit risks. The UJ has been boosted further today by a stronger ADP payrolls report, which printed 195K vs. 148K expected and 142K last. It could remain supported should the ISM services PMI does not disappoint expectations later.
From a technical point of view, the fact that the USD/JPY has broken above 106.45/106.70 resistance area is a positive development, particularly given the dollar weakness against other currencies this week. This will now be the key support that needs to hold if we are to see further gains for this pair.
But having swept liquidity below the January 2019 low and last year’s low both around the 104.50 level last week, one of the bears’ main objectives have now been met. And with price quickly reclaiming the 104.50 level and then pushing higher, one could argue that rates may have formed a false break reversal pattern here. So, this could be the start of a major move higher.But with the nonfarm payrolls due to come and given the ongoing weakness for the dollar against other currencies, we are taking it from one level to the next for now. Consequently, we will be keeping a close eye on the next immediate reference points which could offer resistance. The 107.20/25 area is important to watch given that it was formerly support. Above this, we have a bearish trend line which comes in around 108.00, followed by point of origin of the breakdown in early August at 108.50.
Source: eSignal and FOREX.com.
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.