(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)
Since kicking off 2017, USD/JPY has been busy carving out a descending triangle pattern. The breakout for this configuration is common to the downside, but an upward breakout is considered more reliable and profitable. In recent movement, price elbowed a touch outside the upper boundary of the aforementioned descending triangle to 112.22, and retreated lower, forming a shooting star pattern into February’s end.
Outside of the current pattern, a supply area is visible at 126.10/122.66, while lower on the curve we have a demand area at 96.41/100.81.
March currently trades lower by 1.66%.
Partially altered outlook from previous analysis –
Tuesday’s 120-point downside move drew the market into the jaws of demand coming in at 106.60/107.09, which witnessed a minor breach in October 2019. Demand at 105.57/106.17, albeit not the prettiest of areas given the lack of momentum drawn from the base, moved into focus yesterday following Thursday’s 130-point decline. 106.60/107.09 now represents a potential supply zone.
The RSI indicator entered oversold waters.
Demand at 106.94/107.30 (now a serving supply) gave way in recent trade, with crosshairs now fixed on demand at 105.64/105.89. Note the current demand holds within it a 161.8% Fib ext. at 105.83.
Broad USD weakness Thursday, weighed by waning US Treasuries scoring all-time lows, as well as global equities plummeting, directed USD/JPY through 106.50 to 106 in recent trade. 106.50, as can be seen from the chart, offered resistance shortly after giving way as support.
Supporting 106 on the H1 has daily demand at 105.57/106.17, with both daily and H1 timeframes presenting oversold conditions from respective RSIs. A touch south of 106, we also have H4 demand lurking around 105.64/105.89.
Before buyers step in from daily demand, we could whipsaw through 106, tripping sell-stop liquidity, and bring in H4 buyers from demand at 105.64/105.89.
106.50 represents initial resistance, followed by the underside of daily demand-turned supply at 106.60.
Disclaimer: The information contained in this material is intended for general advice only.