Dollar to Yen Technical Analysis

Inflation data pull dollar to yen higher
.11 Apr 2024
author avatar image Andreas Thalassinos

Table of Contents

Briefing – Dollar to Yen Technical Analysis

Title: Dollar to Yen Technical Analysis
Financial instrument: USDJPY
Timeframe: Daily
Session: London
Trend: Up
Trend Confirmation: Exponential Moving Average(EMA), Moving Average Convergence/Divergence(MACD), Relative Strength Index (RSI), Momentum
Momentum: MACD above its Signal Line
Support Levels: 152.625, 152.008, 151.065
Resistance Levels: 153.568, 154.185, 155.128
Trading Strategy: Buy on Breakouts, Buy on Dips

High Impact Economic Events

Thursday, 12:15 pm (GMT+0): Main Refinancing Rate (EUR)
Thursday, 12:30 pm (GMT+0): Core PPI m/m (USD)
Thursday, 12:30 pm (GMT+0): PPI m/m (USD)
Thursday, 12:30 pm (GMT+0): Unemployment Claims (USD)
Thursday, 05:01 pm (GMT+0): 30-y Bond Auction (USD)
Friday, 06:00 am (GMT+0): GDP m/m (GBP)
Friday, 02:00 pm (GMT+0): Prelim UoM Consumer Sentiment (USD)

Trend Analysis of Dollar to Yen

Dollar to Yen Technical Analysis

The price of USDJPY has exhibited a significant upward move since March 12. After reaching a daily low of 146.483, the price rebounded to form a technical reversal to the upside, commonly referred to as a Morning Star. This reversal pattern was followed by a series of long, bullish candlesticks, which paved the way for an upward trajectory. During this period, the bulls were able to pull the price higher to 151.971 and established the price of USDJPY above the dynamic support of the 50-period Moving Average. Yesterday’s release of the more-than-expected Consumer Price Index propelled the currency pair to close above the Upper Bollinger Band, signaling the continuation of the uptrend.

This recent price action suggests a bullish sentiment in the market. These developments indicate that further upward momentum may be in store for USDJPY.

Indicators and Oscillators Analysis

The Relative Strength Index (RSI) is hovering above its 70 extreme levels, indicating the possible continuation of the upward trajectory. However, traders should exercise caution, as RSI alone may not be a reliable indicator. Additionally, the Bollinger Bands suggest widening volatility as the Upper and Lower Bands started to diverge. At the same time, the Middle Band serves as immediate support to any potential downside correction. The Exponential Moving Average and the Moving Average Convergence/Divergence (MACD) also confirm the upward movement. In particular, prices are trading above the Moving Average line, and MACD is above the zero baseline. Additionally, the Stochastics have moved into the overbought zone, above 80. Moreover, the MACD oscillator indicates a bullish momentum, with the MACD above the Signal line.

Key Support Levels

In the current market scenario, the bulls hold the reins of the USDJPY, and the price of USDJPY will likely continue to rise. The initial support level is seen at 152.625, and a further decline may lead to a breach of this level. If t this happens, the next support level at 152.008 could come into play. The violation of this level may indicate further potential for a downturn, and the next significant support level is estimated to be 151.065. It is crucial to closely watch these support levels to gauge USDJPY’s future direction.

S1–>152.625
S2–>152.008
S3–>151.065

Key Resistance Levels

If the bulls maintain control of the market, a potential correction to the upside may yield gains in the future. However, resistance is likely to arise at various levels. The initial resistance level is estimated to be approximately 153.568; subsequently, resistance is projected to be witnessed at 154.185 and 155.128, respectively. These levels of resistance could pose a challenge to the market’s upward momentum. Nonetheless, with careful consideration of market trends and strict risk management tools, it is possible to navigate these obstacles and mitigate risks.

R1–> 153.568
R2–> 154.185
R3–> 155.128

Trading Strategy for Dollar to Yen

Based on the technical analysis, traders may consider adding to their positions above the recent high of 153.241, which was marked on April 10. On the other hand, aggressive traders may explore short-term buying opportunities on dips toward the support level and the Middle Band, with tight stop-loss orders to manage risk effectively. Additionally, if the bullish momentum persists and candlesticks continue to close above the Upper Bollinger Band, indicating a continuation of the uptrend, traders may take advantage of the rising prices with long positions.

Conclusion

In conclusion, the technical analysis of the USDJPY suggests a bullish outlook that may continue as upward momentum persists. Traders should closely monitor price action around key support and resistance zones and relevant technical indicators to identify potential trading opportunities and manage risk effectively in the current market environment.

author avatar image
Andreas Thalassinos

Experienced educator with a demonstrated history of working in the financial services industry. Skilled in Technical Analysis, Market Risk, Asset Management, Stock Market, and Trading Systems. Strong professional with a MSTA by Society of Technical Analysts (UK), CFTe and MFTA focused in Master of Financial Technical Analysis from International Federation of Technical Analysts (USA).