Is the intraday USD/JPY nearing an exhaustion area?
The rally on the USD/JPY as the yen is being sold against the U.S. Dollar is, in my opinion, reflecting more of the U.S. Dollar’s continued strength rather than the weakness in the yen. The Dow is not rallying as risk appetite remains low following the Wednesday sell-off. I believe this poses some questions for yen pair traders: Is the uptrend in the USD/JPY and the move slightly higher in the EUR/JPY reflecting any near-term risk appetite, as would often be the case if the yen loses ground against the dollar and euro? And therefore, is the U.S. Dollar’s strength simply a play for safety despite the Fed’s statement that rates would stay low for some time to come?
I believe the intraday price action in the USD/JPY shows that whatever the driver may be behind the strong U.S. Dollar may be nearing a stall and potential reversal. The 60-minute USD/JPY has already broken higher through the downtrend line resistance of a Triangle pattern. The subsequent follow-through has taken the pair to the PRS Forecast area which is an area of potential selling pressure as well as an upside target area for the momentum buy from the pattern that triggered at 85.20.
*Results are not guaranteed, individual experiences may vary. Past performance is not indicative of future results
To the left of the Forecast, notice that the USD/JPY hit selling pressure at 86.24. This level is within the Forecast. The USD/JPY is struggling to find buying support above the 86.00 level, and if prices trade lower through the bottom of the Forecast range at 85.67, I will be looking for the overall downtrend. This is seen clearly on the daily time frame – to resume. Notice that there is Forecast support on the daily time frame at 85.35. This will be a support level that the bears will have to trade lower through to see downside continuation.
*Results are not guaranteed, individual experiences may vary. Past performance is not indicative of future results
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