Sample Category Title

GBP/USD - 1.2954

Most recent candlesticks pattern   : N/A

Trend                                 : Near term up

Tenkan-Sen level                 : 1.2940

Kijun-Sen level                    : 1.2973

Ichimoku cloud top              : 1.2998

Ichimoku cloud bottom        : 1.2988

Original strategy :

Buy at 1.2865, Target: 1.3000, Stop: 1.2830

Position : - 

Target :  -

Stop : -

New strategy  :

Buy at 1.2865, Target: 1.3000, Stop: 1.2830

Position : -

Target :  -

Stop : -

Cable’s retreat after faltering below last week’s high of 1.3030 suggests consolidation below this level would be seen, hence weakness to 1.2916 support cannot be ruled out, however, reckon downside would be limited to 1.2865-70 and bring another upmove later, above said resistance at 1.3030 would signal recent upmove is still in progress and may extend further gain towards recent high 1.3048 but loss of near term upward momentum should prevent sharp move beyond 1.3075-80 today and reckon 1.3100 would hold on first testing. 

In view of this, would not chase this rise here and we are looking to buy cable again on pullback as 1.2900 should limit downside and bring another rally. Below previous resistance at 1.2861 would suggest a temporary top is formed instead, risk weakness to 1.2830-35 (50% Fibonacci retracement of 1.2640-1.3030) but support at 1.2794 should remain intact.

Equity investors have entered the third quarter with an optimistic attitude. Despite the low trading volumes and shortened U.S. trading session, stocks across Europe and the U.S. posted considerable gains sending the Dow Jones Industrial Average to a new record high, with the financial and energy sectors taking the lead. Data released on Monday supported the appetite for risk as factories in the Eurozone and the U.S. surprised by being on the upside. The U.S. Manufacturing Index rose to 57.8 from 54.9 in May, its strongest expansion since August 2014. Similarly, the IHS Markit Manufacturing PMI for the Eurozone rose to 57.4, its highest figure since April 2011.

The positive data sent the yields on U.S. 10-year Treasury bonds to their highest levels since mid-May. On the shorter end, 2-year Treasury Notes that are mainly influenced by monetary policy actions rose to their highest levels since June 2009, during the global financial crisis. This move convinced the dollar bulls to return after investors dumped the U.S. currency for four consecutive months. Whether the spike in the U.S. dollar is meant to continue or whether it is just a dead cat bounce depends on how fast other central banks across advanced economies converge into normalization. In the shorter run however, Wednesday's FOMC's minutes and Friday's jobs report will be the prime catalysts. Currency markets are trading in a very narrow range early Tuesday and I expect traders to remain on the sidelines until the U.S. returns from its Independence Day holiday on Wednesday.

Gold was the biggest story yesterday. The yellow metal has lost its shine, posting its biggest one-day fall in almost eight months. The dollar's strength may have contributed to the selling pressures but I think it was only a minor factor. Many investors believe that the bull bond market has come to an end, as central bankers signaled borrowing costs are going up, which going forward will be the major factor impacting precious metals. Breaking below the 200-day Moving Average also attracted bears to drag prices lower, with immediate support now seen at $1,213.80 (May's low). However, if Beijing-Washington tensions continue to escalate after the U.S. made a $1.4 billion arms deal with Taiwan and also sent a navy missile destroyer close to Triton Island in the South China Sea, investors are very likely to return to gold for protection against political risks. Today's launch of a ballistic missile from North Korea further added to the complication of China-U.S. relations, but it seems markets did not take this as a serious threat. Overall, macroeconomic fundamentals are indicating a lower gold price, while geopolitical risks are keeping the Bulls on standby.

Daily Pivots: (S1) 0.7638; (P) 0.7667; (R1) 0.7689; More...

AUD/USD pull back from 0.7711 accelerates to as low as 0.7603 so far. But it's still staying above 0.7534 support and intraday bias remains neutral first. Another rise is in favor as long as 0.7534 support holds. Above 0.7711 will target 0.7748 resistance and above. At this point, there is no clear sign of range breakout yet. Hence, we'd be cautious on topping again as it approaches medium term fibonacci level at 0.7849. On the downside, break of 0.7534 will indicate near term reversal and turn bias back to the downside for 0.7370 support.

In the bigger picture, we're still treating price actions from 0.6826 low as a corrective pattern. And, as long as 38.2% retracement of 0.9504 to 0.6826 at 0.7849 holds, long term down trend from 1.1079 is expected to resume sooner or later. Break of 0.6826 low will target 0.6008 key support level. However, firm break of 0.7849 will indicate that rise from 0.6826 is developing into a medium term rebound, rather than a sideway pattern. In such case, stronger rise should be seen to 55 month EMA (now at 0.8096) and above.

Yen rebounds strongly in Asian session today following steep in decline in China and Hong Kong stocks markets. In particular, the HK HSI is trading down -400 pts, or -1.5% at the time of writing, led by tech titan Tencent and casino stocks. Some attributes the selloff to North Korea's firing of another ballistic missile just ahead of July 4. That drew response from US President Donald Trump, with his tweet that "hard to believe that South Korea and Japan will put up with this much longer". And Trump tried to shift the spot to China again saying that "perhaps China will put a heavy move on North Korea and end this nonsense once and for all!" USD/JPY is back below 113 after surging to 113.46 overnight following the stronger than expected ISM manufacturing data.

Speculations of new BoJ head grow

Also from Japan, Prime Minister Shinzo Abe's advisor Esuro Honda said in a telephone interview last week regarding BoJ that "what's important, especially this time, is whether we can undertake regime change". And for the next BoJ Governor, "it should be someone who is refreshing enough and can renew people's impressions with personal charm and sincerity." This is sharp turn from his prior comments that reappointing current BoJ Governor Haruhiko Kuroda after his term ends next April is an option.

Another advisor, former BoJ board member Nobuyuki Nakahara also said earlier this week that BoJ will need "someone who can prepare for" stimulus exit in the next five years. And Kuroda "will fall into inertia and struggle to come up with bold new ideas". There are growing speculations that Kuroda will not be re-appointed.

Also from Japan, monetary base rose 17.0% yoy in June versus expectation of 19.2% yoy.

Aussie tumbles as RBA stays balanced

Aussie tumbles sharply today after RBA left interest rate unchanged at 1.50% as widely expected. The statement is balanced and markets are disappointed that RBA doesn't turn hawkish like some other global central banks. Policymakers expected that Australian economy would "strengthen gradually". However, they remained concerned over the "subdued" consumption growth, suggesting it reflected "slow growth in real wages and high levels of household debt".

Meanwhile, RBA remained cautious over the property market. As noted in the statement, "in the eastern capital cities, a considerable additional supply of apartments is scheduled to come on stream over the next couple of years. Rent increases are the slowest for two decades". RBA added that "growth in housing debt has outpaced the slow growth in household incomes".

More in RBA Disappointed As It Failed To Hint Rate Hike.

Also from Australian, retail sales rose 0.6% mom in May, above expectation of 0.2% mom.

AUD/JPY possibly in near term reversal

AUD/JPY's sharp fall today now raises the chance that rebound from 81.48 is completed at 86.97, ahead of 88.21 resistance. Focus is now back on 85.07 support. Break there will extend the corrective pattern from 88.21 with another falling leg, back to 38.2% retracement of 72.39 to 88.21 at 82.17. In case of another rise, we'd be cautious on topping at 88.21.

Elsewhere...

Economic calendar is light today with July 4 holiday in US. UK construction PMI and Eurozone PPI are the main features.

AUD/USD Daily Outlook

Daily Pivots: (S1) 0.7638; (P) 0.7667; (R1) 0.7689; More...

AUD/USD pull back from 0.7711 accelerates to as low as 0.7603 so far. But it's still staying above 0.7534 support and intraday bias remains neutral first. Another rise is in favor as long as 0.7534 support holds. Above 0.7711 will target 0.7748 resistance and above. At this point, there is no clear sign of range breakout yet. Hence, we'd be cautious on topping again as it approaches medium term fibonacci level at 0.7849. On the downside, break of 0.7534 will indicate near term reversal and turn bias back to the downside for 0.7370 support.

In the bigger picture, we're still treating price actions from 0.6826 low as a corrective pattern. And, as long as 38.2% retracement of 0.9504 to 0.6826 at 0.7849 holds, long term down trend from 1.1079 is expected to resume sooner or later. Break of 0.6826 low will target 0.6008 key support level. However, firm break of 0.7849 will indicate that rise from 0.6826 is developing into a medium term rebound, rather than a sideway pattern. In such case, stronger rise should be seen to 55 month EMA (now at 0.8096) and above.

Economic Indicators Update

EUR/USD - 1.1356

Most recent candlesticks pattern   : N/A

Trend                      : Near term up

Tenkan-Sen level              : 1.1357

Kijun-Sen level                  : 1.1376

Ichimoku cloud top             : 1.1417

Ichimoku cloud bottom      : 1.1416

Original strategy  :

Buy at 1.1325, Target: 1.1440, Stop: 1.1290

Position : -

Target :  -

Stop : -

New strategy  :

Buy at 1.1300, Target: 1.1400, Stop: 1.1265

Position : -

Target :  -

Stop : -

As euro’s retreat from last week’s high of 1.1446 has kept the single currency under near term pressure, suggesting initial downside risk remains for retracement of recent upmove to 1.1325-30 (38.2% Fibonacci retracement of 1.1139-1.1446), however, reckon support at 1.1292 (as well as 50% Fibonacci retracement) would hold and bring another rise, above 1.1400-10 would bring retest of said resistance at 1.1446, break there would extend recent rise to 1.1455-60 (61.8% projection of 1.1119-1.1389 measuring from 1.1292), then 1.1480.

In view of this, would not chase this rise here and would be prudent to buy euro on pullback as 1.1292 (previous support as well as 50% Fibonacci retracement of 1.1139-1.1446) should limit downside, bring rebound. Below 1.1270 would abort and signal a temporary top is formed, bring correction to 1.1250-55 first.

RBA left the cash rate unchanged at 1.5% in June. While the decision had been widely anticipated, Aussie slumped after the announcement as the central bank failed to deliver a more hawkish tone as its US and European counterparts did. Policymakers affirmed that Australian economy would continue to grow gradually. Yet, they pointed to the strength in Australian dollar and subdue inflation as key reasons for standing on the sideline. Meanwhile, RBA remained concerned over the overheating housing market.

Policymakers judged that the country's economy would 'strengthen gradually, with the transition to lower levels of mining investment following the mining investment boom almost complete' They acknowledged that 'business conditions have improved and capacity utilization has increased” while 'business investment has picked up in those parts of the country not directly affected by the decline in mining investment' Yet, they added that 'consumption growth remains subdued, reflecting slow growth in real wages and high levels of household debt'

The central bank noted that the economy would continue to be boosted by low interest rates, but warned that appreciation in the exchange rate is offsetting the effect. As suggested in the statement RBA reiterated the caution that 'an appreciating exchange rate would complicate this adjustment'

On the housing market, policymakers noted that the conditions are varied across the country. As suggested in the statement, 'in the eastern capital cities, a considerable additional supply of apartments is scheduled to come on stream over the next couple of years. Rent increases are the slowest for two decades. Growth in housing debt has outpaced the slow growth in household incomes' Policymakers noted that ”supervisory measures should help address the risks associated with high and rising levels of household indebtedness'

The market was disappointed as RBA did not deliver a more hawkish tone, as what was done by central banks in the UK, Eurozone and even Canada. Last week, BOE's Mark Carney suggested that rate hike debate was building and growth would be a key issue for discussion. ECB President Mario Draghi also delivered some hawkish comments last Tuesday while there have been heightening speculations that BOC would hike rate, for the first time in 7 years, in as soon as next week.

USD/JPY - 112.85

Most recent candlesticks pattern   : N/A

Trend                      : Near term up

Tenkan-Sen level              : 113.08

Kijun-Sen level                  : 112.96

Ichimoku cloud top             : 112.33

Ichimoku cloud bottom      : 112.22

New strategy  :

Stand aside

Position :  -

Target :  -

Stop : -

Although the greenback has retreated after rising to 113.47 and consolidation below this level would be seen, reckon downside would be limited to 112.60 and the upper Kumo (now at 112.33) should hold and bring another rise later, above said resistance at 113.47 would signal recent upmove is still in progress for headway to 113.75-80 but loss of momentum should prevent sharp move beyond 114.00, bring retreat later.

In view of this, would not chase this rise here and would be prudent to stand aside for now. Below the lower Kumo (now at 112.22) would suggest top is possibly formed but break of 111.90-95 is needed to add credence to this view, bring test of 111.73 support first.

Currency pair EUR/USD

The EUR/USD is building a pullback after breaking above resistance (dotted lines).A bullish bounce could see price approach the Fibonacci targets of wave 5 (purple) which could complete wave 3 (green).

The EUR/USD broke the support trend line (dotted blue) and completed its ABC zigzag correction (orange) within wave 4 (brown). The Fibonacci levels of wave 4 vs 3 (brown) plus the broken resistance levels (blue box) are a key decision zone (point of confluence) and could act as support. A bullish bounce confirms the wave 4 whereas a bearish beak invalidates it.

Currency pair USD/JPY

The USD/JPY is moving higher towards the Fibonacci targets of wave 3 (purple) and wave 5 (orange).

The USD/JPY could be building a wave 4 (grey) retracement as long as price stays above the 50-61.8% Fibonacci level. The most used Fib for wave 4 (grey) is the 38.2% level.

Currency pair GBP/USD

The GBP/USD bullish momentum is hesitating with breaking above the previous top (red). A break above red could see an uptrend continuation towards the Fibonacci targets of wave 3 vs 1 (orange).

The GBP/USD could be building a wave 4 pullback (purple) as long price stays above the Fibonacci levels of wave 4 vs 3 and the support trend line (blue).. A bullish continuation could complete wave 4 and 5 (purple) within wave 3 (orange).

A note on lower timeframe confirming price action...

Waiting for lower timeframe confirmation is our main tool to confirm strength within higher timeframe zones, and has really been the key to our trading success. It takes a little time to understand the subtle nuances, however, as each trade is never the same, but once you master the rhythm so to speak, you will be saved from countless unnecessary losing trades. The following is a list of what we look for:

• A break/retest of supply or demand dependent on which way you're trading.
• A trendline break/retest.
• Buying/selling tails ... essentially we look for a cluster of very obvious spikes off of lower timeframe support and resistance levels within the higher timeframe zone.
• Candlestick patterns. We tend to only stick with pin bars and engulfing bars as these have proven to be the most effective.

We typically search for lower-timeframe confirmation between the M15 and H1 timeframes, since most of our higher-timeframe areas begin with the H4. Stops are usually placed 1-3 pips beyond confirming structures.

EUR/USD

Across the board the US dollar advanced for a second consecutive day on Monday, consequently forcing the EUR southbound. Both the 1.14 handle and a H4 demand base at 1.1372-1.1390 were taken out, leaving H4 price free to finish the day around the 1.1360 mark.

Seeing the H4 candles now trading only inches away from retesting the underside of the recently broken demand zone, would we consider this to be a stable enough platform to sell today? Yes. The reasons behind our decision can be seen on the bigger picture. Weekly price remains loitering within the walls of a major supply zone drawn from 1.1533-1.1278. On the daily chart, there's space for the candles to continue moving south at least until the pair connects with the support area fixed at 1.1327-1.1253.

Our suggestions: Granted, we do seem to have a higher-timeframe connection regarding the H4 resistance area, but we would still require additional confirmation in the form of a H4 bearish candle reversal, before pulling the trigger. This is largely to help avoid any fakeout up to the 1.14 neighborhood. Should a trade come to fruition from 1.1372-1.1390, we'd be looking to ride the train south until we reach 1.1327, followed closely by the 1.13 handle.

Data points to consider: No high-impacting events on the docket today. US banks closed in observance of Independence Day.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: 1.1372-1.1390 ([waiting for a reasonably sized H4 bear candle – preferably a full-bodied candle – to form before pulling the trigger is advised] stop loss: ideally beyond the candle's wick).

GBP/USD

Kicking this morning's report off with a quick look at the weekly timeframe shows that the bears are beginning to make an appearance from the supply zone marked at 1.3120-1.2957. Providing that the bears can hold firm here, the next line in the firing range will be the support level pegged at 1.2789. Turning our attention to the daily timeframe, the pair is also seen interacting with a supply zone at 1.3058-1.2979, which is essentially a partner supply to the aforementioned weekly area. Should this bearish momentum continue to be seen here on the daily chart, it is likely that we'll see price shake hands with a support area coming in at 1.2818-1.2752, which happens to house the weekly support level mentioned above at 1.2789.

Over on the H4 candles, the unit is seen lurking just ahead of May's opening level at 1.2927, shadowed closely by the 1.29 handle. Given this, neither a long nor short seems attractive at the moment. Both the weekly and daily timeframes suggest selling to be the preferred approach, while H4 structure shows multiple supports hovering below current price. The path would, as far as we can see, only be clear once June's opening level at 1.2869 is cleared, and even then we're not left with much wiggle room until we reach the top edge of the aforementioned daily support area at 1.2818.

Our suggestions: Based on current structure, our team has decided to humbly step aside today.

Data points to consider: UK Construction PMI at 9.30am GMT+1. US banks closed in observance of Independence Day.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: Flat (stop loss: N/A).

AUD/USD

During the course of Monday's segment, the H4 candles breached support at 0.7676 and headed for the mid-level support at 0.7650. This number, as you can see, managed to stabilize price into the closing bell. According to the weekly timeframe, where recently a trendline resistance extended from the high 0.7835 was brought into view, we could see price action slip lower and eventually touch gloves with a support area formed at 0.7610-0.7543. On the other side of the spectrum, however, daily price is seen located within a support area coming in at 0.7679-0.7640. While it is not wise to overlook this zone, things do not look too promising at the moment. The next area of interest beyond here can be seen at 0.7556-0.7523: another support area that's positioned within the noted weekly support zone.

Our suggestions: In a similar fashion to Monday's report, this remains a somewhat difficult market to trade at the moment. Although the weekly timeframe suggests that selling could be the way forward, both the H4 and daily charts suggest otherwise! Therefore, we believe opting to stand on the sidelines may be the better position to take today.

Data points to consider: Australian Retail sales figures at 2.30am, RBA Rate statement at 5.30am GMT+1. US banks closed in observance of Independence Day.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: Flat (stop loss: N/A).

USD/JPY

The buyers managed to find their feet early on in the day yesterday. Multiple H4 tech resistances were wiped out, with price only showing signs of stabilization as the unit approached the H4 mid-level resistance at 113.50. Bolstering this number, there's a daily trendline resistance taken from the high 115.50. But is this enough to halt further buying today? The reason for asking this is due to weekly price showing room to advance up to supply coming in at 115.50-113.85 in the shape of a potential AB=CD correction (see pink arrows).

Our suggestions: While a sell from 113.50 looks appealing, we would not feel comfortable trading against potential weekly flow. With that being the case, we will not be selling from 113.50, or the H4 resistance seen planted above it at 113.74. Instead will be looking for price to extend its gains today and hopefully connect with the aforementioned weekly supply zone, before considering a sell.

Data points to consider: No high-impacting events on the docket today. US banks closed in observance of Independence Day.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: Flat (stop loss: N/A).

USD/CAD

Trade update: The short position taken from 1.2972 was recently stopped out at 1.3005.

In recent trading, we've seen the H4 candles punch back above the 1.30 region and tap a high of 1.3013. This move has very likely triggered a truckload of stop-loss orders, including ours! However, all may not be lost here! The current H4 candle is looking incredibly bearish right now. Should this candle close at, or very near, its lows, this would be a strong signal to indicate a selloff may be on the horizon. Why we feel so strongly regarding shorting this market comes down to seeing both the weekly and daily charts showing room for the loonie to continue pressing lower, at least until we reach daily demand based at 1.2822-1.2883.

Our suggestions: With stops taken from above 1.30, and the higher-timeframe picture showing space to move lower as well as a possible H4 full-bodied bearish candle that closes below 1.30, this is something we would look to sell. The first take-profit target would be a H4 demand base seen at 1.2910-1.2923. A break beyond here, however, would push us to look at the top edge of the daily demand at 1.2883.

Data points to consider: No high-impacting events on the docket today. US banks closed in observance of Independence Day.

Levels to watch/live orders:

• Buys: Flat (Stop loss: N/A).
• Sells: Should the current H4 candle close bearishly, then a short from here is valid (stop loss: 1.3015).

USD/CHF

For those who have been following recent reports you may recall that our team is long from 0.9567. Our reasoning behind the position came down to the higher-timeframe picture. The green area shown on the H4 chart is comprised of a weekly support level at 0.9581 and a daily support level pegged at 0.9546. Initially, we had our stop beneath the green zone at 0.9544, but seeing as how the Swissy took off north yesterday, our stop is now resting at breakeven. In addition to this, we have also removed 70% of the position off the able once price struck weekly resistance at 0.9639. We're going to hold the remaining 30% in the market since if the weekly resistance level is taken out; we feel June's opening level at 0.9680 will be next in the firing range.

Our suggestions: Apart from our current trade, we do not see a lot to hang our hat on. Yes, one could look to sell from the current weekly resistance level, since the underlying trend in this market is pointing south. For us personally, we will hold fire and see if the bulls have any drive left after coming into contact with the weekly level.

Data points to consider: No high-impacting events on the docket today. US banks closed in observance of Independence Day.

Levels to watch/live orders:

• Buys: 0.9567 ([live] stop loss: breakeven).
• Sells: Flat (stop loss: N/A).

DOW 30

US equities, as you can see, continued to climb higher on Monday, eventually challenging and taking out a H4 trendline resistance extended from the high 21541. In Friday's report, we mentioned that our desk took a long trade at 21323, following the large H4 bull candle that formed off the H4 support level marked at 21268. What attracted us to this point was that the H4 level converged with a H4 61.8% Fib support level at 21275 taken from the low 21108 as well as a H4 127.2% Fib ext. point 21237 drawn from the high 21541 and also because of the daily demand at 21192-21254.

Our stop-loss order has now been moved to breakeven and 50% of our position was taken off the table once price connected with the said H4 trendline resistance. We have left the remaining 50% in the market to run as we believe that this index has the potential to punch much higher yet!

Our suggestions: Given our current long position, our desk is watching for the H4 trendline to now hold as support. This could, given that the weekly, daily and H4 charts show absolutely no overhead resistance, also be a reasonable level to look for possible long opportunities. Personally, we're happy as we are. Should price break into fresh highs today, however, we've noted that we are going to move our stop-loss order up to the 21400 neighborhood.

Data points to consider: No high-impacting events on the docket today. US banks closed in observance of Independence Day.

Levels to watch/live orders

• Buys: 21323 ([live] stop loss: breakeven).
• Sells: Flat (stop loss: N/A).

GOLD

With the US dollar recently seen advancing higher, it was no surprise to see the price of the yellow metal decline in value. On the weekly timeframe, this has brought the unit down into the jaws of a demand base coming in at 1194.8-1229.1. Looking down to the daily timeframe, the recent move south enabled this market to break through the channel support taken from the low 1180.4, and trade deep into a demand area formed at 1214.1-1225.5.

Over on the H4 timeframe, we can also see that the price of gold stabilized around a demand area seen at 1216.7-1219.3. This area is positioned within both the weekly and daily demands mentioned above, and therefore could hold prices higher today and eventually send the metal north to retest 1229.1-1231.6 as resistance.

Our suggestions: While we are interested in buying this market, we would be hesitant at current prices. Ideally, should we see H4 price retest the said H4 demand zone today and print a reasonably sized H4 bull candle, preferably a full-bodied candle, we would have no hesitation in buying this market and targeting 1229.1-1231.6 as an initial take-profit zone.

Levels to watch/live orders:

• Buys: 1216.7-1219.3 ([waiting for a reasonably sized H4 bull candle – preferably a full-bodied candle – to form before pulling the trigger is advised if you want to help avoid a potential fakeout] stop loss: ideally beyond the candle's tail).
• Sells: Flat (stop loss: N/A).

Key Points:

• Despite the recent uptrend, the pair looks ready to retreat.
• The long-term pennant should remain in place.
• Losses could extend to the 110.17 handle.

The Dollar-Yen has been advancing rather consistently over the past few weeks, largely ignoring the notable selling pressure besetting the greenback. Due to this, it's little wonder that when the pair surged around 1.15% higher yesterday, hopes of challenging May's high once again began to circle. Unfortunately for the bulls, the technical bias may not be as rosy as it at first appears and the bears could be about to stage a comeback.

As shown below, on the face of it, the USDJPY does indeed look rather bullish and could very well be poised to push higher in the coming days. For one thing, the EMA bias is highly bullish and the Parabolic SAR is certainly indicating that an uptrend is underway. Nevertheless, these two readings could be somewhat misleading. Upon digging a little deeper, it becomes clear that whilst it is currently below price action, the Parabolic SAR could quite easily invert if yesterday's gains are reversed. If this was to occur, the overall bias would shift to bearish rather rapidly – potentially sparking a rout.

Of course, this medium-term shift in trend hinges on a sharp near-term reversal. Luckily, just such a slip is looking rather likely given the USDJPY's proximity to the robust long-term declining trend line that constitutes the upside constraint of the broader pennant structure. This trend line has proven to be an excellent source of resistance over the past months and we expect that it should encourage a reversal yet again. This expectation is only reinforced by the fact that stochastics are well and truly overbought and in sore need of being relieved.

Once the bears are back in control, losses are expected to extend to around the 110.17 handle. At this price, the presence of the 78.6% Fibonacci level and the downside of the pennant should supply ample support and encourage the pair to moderate or even reverse. However, given the extent to which price action has narrowed, it is now withinthe realm of possibility that a breakout could be seen. Due to this, we may have to take a closer look at the pair nearer to the time to establish whether the USDJPY has another reversal left in it.

Overall, keep an eye on the pair as we could certainly have a bumpy few weeks on our hands. Moreover, don't neglect the fundamental side of things as data releases could generate some sizable intra-day volatility for the Dollar-Yen.