USD/JPY Weekly Outlook

USD/JPY’s rebound from 105.98 resumed last week and hit as high as 109.85. Initial bias remains on the upside this week for retesting 111.71112.22 resistance zone. Decisive break there will carry larger bullish implications. On the downside, below 108.61 minor support will turn intraday bias neutral and bring consolidations first.

In the bigger picture, USD/JPY is still staying in long term falling channel that started back in 118.65 (Dec2016). Hence, there is clear indication of trend reversal yet. Break of 105.98 support would extend the down trend through 101.18 low. However, sustained break of 112.22 should confirm completion of the down trend and turn outlook bullish for 118.65 and above.

In the long term picture, the rise from 75.56 (2011 low) long term bottom to 125.85 (2015 high) is viewed as an impulsive move, no change in this view. Price actions from 125.85 are seen as a corrective move which could still extend. In case of deeper fall, downside should be contained by 61.8% retracement of 75.56 to 125.85 at 94.77. Up trend from 75.56 is expected to resume at a later stage for above 135.20/147.68 resistance zone.

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