USD/JPY Technical Analysis Forecast

USDJPY technical analysis forecast
.22 Apr 2024
author avatar image Andreas Thalassinos

Table of Contents

Briefing on USD/JPY

  • Title: USD/JPY Technical Analysis Forecast
  • Financial instrument: USD/JPY
  • Timeframe: Daily
  • Session: London
  • Trend: Up
  • Momentum: Up
  • Trend Confirmation: Exponential Moving Average(EMA), Momentum Oscillator, Moving Average Convergence/Divergence(MACD), Relative Strength Index
  • Support Levels: 154.128, 153.471, 152.297, 151.640
  • Resistance Levels: 154.785, 155.302, 155.959, 157.133
  • Trading Strategy: Buy on Breakouts

High Impact Economic Events

  • Tuesday, 07:15 am (GMT+0): French Flash Manufacturing PMI (EUR)
  • Tuesday, 07:15 am (GMT+0): French Flash Services PMI (EUR)
  • Tuesday, 07:30 am (GMT+0): German Flash Manufacturing PMI (EUR)
  • Tuesday, 07:30 am (GMT+0): German Flash Services PMI (EUR)
  • Tuesday, 08:30 am (GMT+0): Flash Manufacturing PMI (GBP)
  • Tuesday, 08:30 am (GMT+0): Flash Services PMI (GBP)
  • Tuesday, 01:45 pm (GMT+0): Flash Manufacturing PMI (USD)
  • Tuesday, 01:45 pm (GMT+0): Flash Services PMI (USD)
  • Wednesday, 04:30 am (GMT+0): CPI q/q (AUD) 
  • Wednesday, 04:30 am (GMT+0): CPI y/y (AUD)
  • Wednesday, 04:30 am (GMT+0): Trimmed Mean CPI q/q (AUD)
  • Wednesday, 03:30 pm (GMT+0): Advance GDP q/q (USD)
  • Wednesday, 03:30 pm (GMT+0): Unemployment Claims(USD)
  • Friday, Tentative: BOJ Policy Rate(JPY)   
  • Friday, 03:30 pm (GMT+0): Core PCE Price Index m/m (USD)

Trend Analysis of USD/JPY

USD/JPY price chart displaying a rally, with potential support and resistance levels. Also, it shows four oscillators and indicators supporting the bullish outlook.

The USD/JPY currency pair has been in an uptrend since December 28, 2023, when it formed a Hammer reversal pattern after reaching a daily low of 140.249. Subsequently, the price formed a chart reversal known as a failure swing. Specifically, the trough at 143.417 failed to move lower than the previous trough at 140.249. Instead, the price exceeded the peak at 145.979, above the 50-period Exponential Moving Average. At the same time, the Momentum oscillator emerged above its 100-baseline mark, confirming the upward bias. 

This recent price action suggests a continuation of the positive sentiment in the market, with a possible correction to the downside as indicated by the negative divergence between the price and the Momentum oscillator.  

Indicators and Oscillators Analysis

The current Relative Strength Index (RSI) for the currency pair is at a level above 70, indicating that it has entered an extreme overbought zone. However, this also suggests that the upward trend is likely to continue. Traders should exercise caution and not rely solely on the RSI as an indicator, as it may not be entirely dependable. 

In addition, the Exponential Moving Average and Moving Average Convergence/Divergence (MACD) support the upward movement. This is shown by the fact that the prices are trading above the Moving Average line, and the MACD is above the zero baseline. Furthermore, the Stochastic oscillator has also moved above the 80-overbought territory, and the MACD oscillator is above its signal line, indicating a potential continuation of the rally.

Key Resistance Levels for USD/JPY

According to the current market situation, the USD/JPY pair is under the control of the bulls, and it is expected that the corresponding price will continue to rise. The initial resistance level is seen at 154.785, and further progress may result in the crossing of this level. If this happens, the next potential level at 154.785 could come into play. The violation of this level may indicate additional potential for gains, and the next significant resistance level is estimated to be 155.959. It is essential to keep a close eye on these support levels to determine the future direction of the pair.

R1–>154.785

R2–>154.785

R3–>155.959

R4–>157.133

Key Support Levels for USD/JPY

If the market falls and the bears take control, there is a possibility of a downward correction that could result in losses in the future. However, there are several levels of support that may arise. The first support level is estimated to be around 154.128. Subsequently, support is projected to be witnessed at 153.471 and 152.297, respectively. These support levels could pose a challenge to the market’s downward momentum. Nevertheless, with careful consideration of market trends and the use of strict risk management tools, it is possible to navigate these obstacles and mitigate risks.

S1–> 154.128

S2–>153.471

S3–>152.297

S4–>151.640

Trading Strategy for USD/JPY

Based on technical analysis, traders may be interested in adding to their positions when the price of the asset breaks through the recent resistance level of 154.785. 

On the other hand, for traders who are more aggressive, there may be short-term buying opportunities when the price dips towards support levels. It is recommended to use tight stop-loss orders to manage risk effectively. 

If the bullish momentum continues and the candlesticks close above the Upper Bollinger Band, indicating a continuation of the uptrend, traders may want to take advantage of the rising prices by opening long positions.

Conclusion

In conclusion, the technical analysis of the USD/JPY suggests a bullish outlook with the possibility of a short-term correction to the downside, with the US/JPY testing critical levels. 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).