Japanese Yen (¥) ⇨ US Dollar ($)(JPYUSD) Risk Factor

Japanese Yen (¥) ⇨ US Dollar ($)(JPYUSD) Risk Factor

Japanese Yen (¥) ⇨ US Dollar ($)(JPYUSD) Risk Factor

  • USD/JPY likely to remain bullish in the near term as dollar surges
  • BOJ discussing removing stimulus and tapering
  • Watch for a move towards the 112.00 handle in the coming week

The USD/JPY was strongly positive throughout most of last week as the pair rallied strongly in response to the U.S. Fed’s decisionto hike interest rates. Subsequently, the pair closed the week sharply higher around the 1.1084 mark and within striking distance of the 100 Day MA. However, it remains to be seen if the USD/JPY can mount a successful attack on the 112 handle in the near term. So let’s take a look at what occurred last week and what is potentially looming on the horizon in the week ahead

Today’s USD/JPY Signals

Risk 0.75%.

Trades may only be taken from 8am New York time until 5pm Tokyo time, over the next 24-hour period.

Short Traders:

  • Go short following a bearish price action reversal on the H1 time frame immediately upon the next entry into the zone between 111.47 and 111.67.
  • Put the stop loss 1 pip above the local swing high.
  • Move the stop loss to break even once the trade is 20 pips in profit.
  • Take off 50% of the position as profit when the trade is 20 pips in profit and leave the remainder of the position to ride.

Long Traders: 

  • Go long following a bearish price action reversal on the H1 time frame immediately upon the next touch of 109.82.
  • Put the stop loss 1 pip below the local swing low.
  • Move the stop loss to break even once the trade is 20 pips in profit.
  • Take off 50% of the position as profit when the trade is 20 pips in profit and leave the remainder of the position to ride.

Technical Analysis
The price has finally broken up out of its long-term bearish channel, which is an important bullish technical sign. After rising strongly and being held by the resistant area beginning at 111.47, the price pulled back, but has been rising again in recent hours. Although the action may be very slow today, the most probably scenario looks like a test of the resistant area above. A failure there could be a good opportunity to enter a short trade. The nearest key support level is a long way below, but there is a supportive trend line which could hold any downwards move at a higher price.

Overall, the bias in prices is: Sideways.

Short term: Prices are stalling.

Intermediate term: Prices are ranging.

By the way, prices are vulnerable to a correction towards 111.50.

The projected upper bound is: 112.89.

The projected lower bound is: 109.09.

The projected closing price is: 110.99.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 6 white candles and 4 black candles for a net of 2 white candles. During the past 50 bars, there have been 26 white candles and 24 black candles for a net of 2 white candles.

An engulfing bullish line occurred (where a white candle’s real body completely contains the previous black candle’s real body). The engulfing bullish pattern is bullish during a downtrend. It then signifies that the momentum may be shifting from the bears to the bulls.

If the engulfing bullish pattern occurs during an uptrend (which appears to be the case with FOREX JPY=), it may be a last engulfing top which indicates a top. The test to see if this is the case is if the next candle closes below the top of the current (white) candle’s real body.

Momentum Indicators

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 85.7336. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a buy 7 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 51.32. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 27 period(s) ago.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 93. This is not a topping or bottoming area. The last signal was a buy 2 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 2 period(s) ago.

Rex Takasugi – TD Profile

FOREX JPY= closed up 0.150 at 110.990. Volume was 47% below average (neutral) and Bollinger Bands were 35% narrower than normal.

Open       High       Low         Close      Volume
110.820   111.200  110.730  110.990  59,298

Technical Outlook
Short Term:               Neutral
Intermediate Term: Bearish
Long Term:                Bullish

Moving Averages: 10-period  50-period  200-period
Close:                       110.18        111.01         110.71
Volatility:                11                11                12
Volume:                   114,339     111,487      123,085

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary

FOREX JPY= is currently 0.3% above its 200-period moving average and is in an downward trend. Volatility is extremely low when compared to the average volatility over the last 10 periods. There is a good possibility that there will be an increase in volatility along with sharp price fluctuations in the near future. Our volume indicators reflect volume flowing into and out of JPY= at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bearish on JPY= and have had this outlook for the last 13 periods. Our momentum oscillator has set a new 14-period high while the security price has not. This is a bullish divergence.

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Ivy Heffernan

Ivy Heffernan, student of Economics at Buckingham University. Junior Analyst at HeffX and experienced marketing director.

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