ICM Technical Analysis : USD/JPY 27 February 2020

ICM Technical Analysis : USDJPY – 27 February 2020

The US dollar finished Wednesday higher against the Japanese yen, snapping a three-day losing streak. The pair caught fresh bids off the 110 handle, lifted by modest bidding in US equities and a rebound in US Treasury yields. The H4 candles, however, struggled to gain much headway past 110.50, possibly threatening another revisit at 110 today.

A 61.8% H4 Fibonacci retracement lurks a few points at the back side of 110 at 109.80, with a violation potentially setting the stage to December’s opening level at 109.51 and support coming in at 109.27. Beyond here, aside from 1.09, limited support is visible until reaching January’s opening level at 108.62.

The weekly timeframe shows the pair delivered a near-full-bodied bullish candle north of the 2019 yearly opening level at 109.68 last week, but encountered resistance off a Quasimodo formation at 112.14, sited just south of the 2018 yearly opening level at 112.65. Recent selling has brought the current weekly candle to within touching distance of the 2019 yearly opening level at 109.68.

In similar fashion to weekly structure, the daily timeframe had price fade Quasimodo resistance at 112.19 at the tail end of the week, located a few points beneath resistance at 112.56. Follow-through selling from this region has been seen this week, rupturing support at 110.89 (now a serving resistance). Despite yesterday’s recovery, the pair is still seen closing in on the weekly support level mentioned above at 109.68.

Areas of consideration:

Well done to any readers who took advantage of bearish themes beneath 112 on Friday; this was a noted move to be aware of. The risk/reward from here is just mouth-watering.

Going forward, 110 is likely to give way, knowing weekly support resides just beneath at 109.68. A test of this weekly base, followed up with a close back above 110 could prompt a recovery in this market, fuelled on the back of sell-stop liquidity taken from beneath 110.

Should we continue pressing higher, though, the combination of the 111 handle on the H4 timeframe and daily support (now serving as resistance) at 110.89 could, once again, provide a ceiling for possible bearish themes.

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