ICM Technical Analysis : USD/JPY 4 March 2020

ICM Technical Analysis : USDJPY – 4 March 2020

The US dollar held onto the bulk of its daily loss against the Japanese yen Tuesday, amid global risk aversion. The surprise decision to slash interest rates by the Federal Reserve increased demand for perceived safe-haven flow, including US government bonds and the Japanese yen. Yield on the 10-year US Treasury note clocked all-time lows at 0.91%.

Monday’s analysis stated the following regarding a potential resistance zone on the H4 timeframe:

To the upside, a reasonably nice-looking area of resistance exists between 108.62/108.47 (green), comprised of January’s opening level at 108.62, resistance at 108.58 and February’s opening level at 108.47.

As evident from the charts, the said resistance zone on the H4 chart held firm, driving the H4 candles through 108 and support drawn from 107.43 until shaking hands with the 107 handle. 107.43 is likely to offer the market resistance in the event of a continued recovery from 107. With respect to the relative strength index (RSI), we are seeing mild bullish divergence within the confines of oversold levels.

Crossing into higher-timeframe view, daily price failed to sustain gains above the 200-day SMA (orange – 108.38) and tested Quasimodo support at 106.96, closely shadowed by support at 106.80. The story on the weekly timeframe had price action record its largest weekly drop since July 2016 last week. Buying in this market could position price back around the 2019 yearly opening level at 109.68, whereas the 106.48 September (2019) 30th low could be next on tap, with following support located around a Quasimodo formation off 105.35.

Areas of consideration:

The fact we have daily Quasimodo support at 106.96 in view and are rebounding from 107 on the H4 timeframe could, despite room to explore lower levels on the weekly timeframe, prompt a recovery today, with a break back above H4 resistance at 107.43 possible, towards 108.

Conservative traders will likely want to see H4 resistance taken out before considering bullish themes to 108.

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