FPM Technical Analysis : USDJPY 25 February 2020

FPM Technical Analysis : USD/JPY (25 February 2020)

Monthly timeframe:

(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 is now seen retreating.

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.

Currently, the pair trades +2.34% on the month.

Daily timeframe:

Partially altered outlook from previous analysis –

The combination of a channel resistance from 108.47 and supply at 112.66/112.08 held price action lower at the tail end of the week. Follow-through selling was seen Monday, stretching to lows of 110.33, now poised to challenge a fresh area of demand at 109.52/109.99, typically labelled a ‘rally-base-rally demand’.

The RSI indicator also voyaged into overbought terrain in recent trading, with Monday exiting lower.

H4 timeframe:

Leaving supply at 112.63/112.25 unchallenged, USD/JPY continued to explore lower ground Monday, breaching channel resistance-turned support (109.98) and bottoming a touch north of a supply-turned demand area at 110.02/110.23. Note this area also converges with channel support (108.31)

H1 timeframe:

Despite strong moves lower Monday, early trade this morning is attempting to claw back recent losses, now crossing paths with the underside of 111 after finding a ‘floor’ off 110.50. A move above 111 has demand-turned supply seen close by at 111.32/111.49, shadowed by 111.50. In addition to this, as of current price, the 100/50-period SMAs are seen intersecting with the said zone.

Direction:

Knowing we have room to push lower from daily supply at 112.66/112.08, with weekly price holding south of structure, bearish themes could be in store today, either off the 111 handle or demand-turned supply at 111.32/111.49.

Disclaimer: The information contained in this material is intended for general advice only.