USDJPY and EURUSD Technical Analysis

Talking Points:

• USD/JPY Technical Strategy: Flat
• Support: 101.94-99 (38.2% Fib exp., channel top), 102.35 (23.6% Fib exp.)
• Resistance: 101.61 (50% Fib exp.), 101.28 (61.8% Fib exp.)

The US Dollar is attempting to extend its recovery against the Japanese Yen for a fourth consecutive trading day. Buyers are testing resistance in the 101.94-99 area, marked by the 38.2% Fibonacci expansion and the top of a falling channel that has guided prices over the past month. A daily close above this barrier exposes the 23.6% level at 102.35. Near-term support is at 101.61, the 50% Fib, with a turn back below that eyeing the 61.8% expansion at 101.28.

Prices are too close to resistance to justify a long position from a risk/reward perspective. On the other hand, the absence of a defined bearish reversal signal warns against taking up the short side. With that in mind, we remain flat for now.




--- Written by Ilya Spivak, Currency Strategist for DailyFX.com



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Talking Points

• USD/JPY Technical Strategy: Shorts Preferred
• Bearish Engulfing pattern suggests declines to continue
• Range-bottom offers target of 101.20 for shorts

USD/JPY may be set to extend its recent declines following the formation of a Bearish Engulfing candlestick pattern near the range-top at 102.77. This may afford new short opportunities with an ultimate target offered by the range-bottom at 101.20. Interim buying support is likely to emerge at the psychologically-significant 102.00 handle.

USD/JPY: Bearish Engulfing Pattern Emerges Near Key Resistance



The Hammer formation on the four hour chart failed to stir the USD/JPY bulls. A close below buying support at 102.25 would provide an indication of strong conviction amongst the bears and pave the way for an extended decline to the next level of buying support at 101.50.

USD/JPY: Close Below 102.25 Needed To Open 101.50



By David de Ferranti, Market Analyst, DailyFX

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Talking Points

• USD/JPY Technical Strategy: Shorts Preferred
• Bearish Engulfing pattern suggests declines to continue
• Range-bottom offers target of 101.20 for shorts

USD/JPY may be set to extend its recent declines following the formation of a Bearish Engulfing candlestick pattern near the range-top at 102.77. However, new short entries may not be ideal at current levels, given support rests nearby at 101.20.

USD/JPY: Bearish Engulfing Pattern Puts Pressure on USD/JPY



An examination of the four hour chart reveals a Piercing Line pattern which helped indicate an intraday bounce for the pair. However, a further recovery may be a stretch with the psychologically-significant 102.00 handle hanging nearby.

USD/JPY: Recovery Post Piercing Line Limited By Nearby Resistance



By David de Ferranti, Market Analyst, DailyFX

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Talking Points

• USD/JPY Technical Strategy: Longs Preferred
• Doji suggested hesitation near key support
• Range between 101.20 and 102.77 remains in play

USD/JPY’s long-held range between 101.20 and 102.77 remains intact after the pair teased at a breakout in recent trading. A Doji near 101.20 signaled hesitation amongst traders, and while not a key reversal pattern, helped herald a bounce.

Traders should note the upcoming US NFPs report hold the potential to spark significant volatility for USD/JPY, which could act to negate technical signals offered.

USD/JPY: Range Remains Intact



Scrutinizing the four hour chart below there is a notable absence of bearish reversal formations, which casts doubt on the potential for a pullback in intraday trade. The bulls were seemingly undeterred by an Evening Star formation near 101.65, suggesting they remain in control of prices for now.

USD/JPY: Bearish Reversal Patterns Absent In Intraday Trade



By David de Ferranti, Currency Analyst, DailyFX

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Talking Points

• USD/JPY Technical Strategy: Longs Preferred
• Doji suggested hesitation near key support
• Range between 101.20 and 102.77 remains in play

USD/JPY’s long-held range between 101.20 and 102.77 remains intact after the pair teased at a breakout in recent trading. A Doji near 101.20 signaled hesitation amongst traders, and while not a key reversal pattern, the candlestick helped herald a bounce. While a Harami pattern appears to be forming on the daily it does little to suggest a correction until the current candle closes.

USD/JPY: Range Remains Intact



Scrutinizing the four hour chart below a Doji formation signaled some indecision after USD/JPY’s dramatic ascent in recent trading. While the candlestick yielded a slight retreat, further follow-through may be limited given the context afforded by the daily.

USD/JPY: Doji Yields Slight Retreat



By David de Ferranti, Currency Analyst, DailyFX

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Talking Points

• USD/JPY Technical Strategy: Sidelines Preferred
• Doji suggested hesitation near key support
• Range between 101.20 and 102.77 remains in play

USD/JPY’s long-held range between 101.20 and 102.77 remains intact following a push off support backed by a Doji formation. However, the pair may fall short of its range-top as a Harami pattern highlights the potential for a pullback.

USD/JPY: Consolidation Continues



Scrutinizing the four hour chart below a Harami pattern near support at 101.65 suggests the potential for a recovery over the session ahead. However, given the context afforded by the daily and nearby resistance at 102.10, the extent of a recovery may prove limited.

USD/JPY: Harami Hints At Intraday Recovery



By David de Ferranti, Currency Analyst, DailyFX

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Talking Points

• USD/JPY Technical Strategy: Pending Long
• Haramidelivers declines, putting key support in focus
• Range between 101.20 and 102.77 remains in play

USD/JPY has extended recent declines on the on the back of a Harami pattern on the daily which suggested the bears were looking to take control of prices. However, the candlestick formation may fail to find further follow-through given the long-held range-bottom rests nearby at 101.20. A key reversal pattern near the noteworthy support level would be taken as an opportunity to enter new longs.

USD/JPY: Awaiting Reversal Signals Near Range-Bottom



Scrutinizing the four hour chart; a Hammer formation hints at an intraday recovery for USD/JPY. A break above nearby resistance at 101.65 would open a run on the psychologically-significant 102.00 handle.

USD/JPY: Hammer Hints At Intraday Recovery



By David de Ferranti, Currency Analyst, DailyFX



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- US Dollar trades near range lows versus the Japanese Yen
- A look at real FX volume indicator highlights key levels worth watching
- We’re waiting for a drop towards bigger support

The Dollar is trading in a tiny range versus the Japanese Yen. Is it a good time to buy? These are the price levels we’re watching for potential trades.

USDJPY Coiling up For Next Big Move as Low Volume and Volatility Warn of Complacency



The USDJPY currently trades towards the bottom of its tiny trading range. In order to gauge whether a breakdown is possible we take a look at the most significant levels of trader interest—prices at which volume was highest.

Spikes in Volume Tell us Where Traders are Most Likely to Defend Support and Resistance



Our data shows that the biggest volume spikes in the past three months occurred when the USDJPY traded to ¥100.80, 101.70, 102.15, 102.60, and 103.00. Why does this matter?

Put simply, these are the levels which traders have traded most aggressively as the pair sticks to its narrow range. If there was significant selling interest as the pair pulled back from ¥102.15, for example, we might expect many of the same traders to sell once more if price approaches that level.

It bears mention that there was no such spike in volume as the USDJPY traded into multi-month lows near ¥101.20. We have to go back to the May low at ¥100.80 to see a more significant jump in trading volume. All the while, there are a number of important resistance levels just above current price.

A closer look at what traders are holding shows that the vast majority remain long the USDJPY. In fact our Retail FX Positioning chart (below) shows that current levels of positioning have coincided with Dollar bounces on a year-to-date basis. Does that mean we might buy the USDJPY at current levels?

Retail FX Positions Consistent with Important Turns in USDJPY



One-sided positions suggest the pair is likely to trade higher, but potential reward on the trade looks limited in comparison to potential risk. According to our volume data, big support is at ¥100.80—currently 90 points from market price at 101.70. Important resistance starts at ¥102.15 which would put our first price target on a long position a mere 45 points away.

With twice as much risk as potential reward (90 versus 45), it seems excessively risky to buy USDJPY at current levels. Instead we might look to buy if price dips back towards the 100.80 lows with a target for range highs.

The long-term consolidation pattern suggests that the USDJPY might break significant price levels and could be worth a buy. Yet until that happens we’ll look for range trading opportunities.


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Talking Points

• USD/JPY Technical Strategy: Pending Long
• Harami delivers declines to range-bottom at 101.20
• Awaiting key reversal pattern to signal a recovery

USD/JPY has extended recent declines on the on the back of a Harami pattern on the daily which suggested the bears were looking to take control of prices. However, the candlestick formation may fail to find further follow-through given the long-held range-bottom rests nearby at 101.20. A Doji appears to be forming on the daily in intraday trade, however the candlestick is insufficient to suggest a bullish reversal at this point.

USD/JPY: Awaiting Reversal Signals Near Range-Bottom



Scrutinizing the four hour chart; a Piercing Line formation suggests the bulls are not yet prepared to relinquish their grip on prices. However, the extent of a recovery may be limited by overhanging resistance at the 101.45 mark.

USD/JPY: Piercing Line Pattern Demonstrates Resilience By The Bulls




By David de Ferranti, Currency Analyst, DailyFX

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Talking Points

• USD/JPY Technical Strategy: Pending Long
• Doji suggests bulls losing steam after bounce off-range-bottom
• Absence of reversal patterns cast doubt on an intraday recovery

The USD/JPYbulls have seemingly lost steam in recent trading with the pair posting a Doji formation on the daily. While not a key reversal pattern, the sign of indecision may suggest a loss of confidence to push the pair higher. This puts the all-important 101.20 mark back in focus.

USD/JPY: Range-Bottom Back In Focus As Bulls Lose Steam



Scrutinizing the four hour chart; despite USD/JPY testing intraday support at 101.45, bullish reversal patterns are absent. This casts doubt over the potential for a bounce over the session ahead. A break lower would set the stage for a drop to 101.20/5.

USD/JPY: Lacking Reversal Patterns In Intraday Trade



By David de Ferranti, Currency Analyst, DailyFX

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