Short-term technical outlook on USD/JPY
Key technical elements
- After it printed a high of 114.10 in yesterday (23 Oct) Asian session reinforced by the landslide victory of incumbent PM Abe’s LDP in the 48th Japanese general election, the pair has succumbed to profit-taking. Interestingly, it pull-backed towards a key medium-term support zone of 113.20/06.
- The key medium-term support zone of 113.20/065 is defined by the pull-back support of a former range resistance from 10 March 2017 high, the former minor range top areas of 27 Sep/03 Oct/06 Oct 2017, the lower boundary of a short-term ascending channel in place since 16 Oct 2017 low and the 38.2% Fibonacci retracement of the on-going up move from 16 October 2017 low to yesterday’s high (see daily & hourly charts)
- The hourly Stochastic oscillator has flashed a bullish divergence signal at its oversold region which suggests that the downside momentum of yesterday’s drop in price action has started to abate.
- The next significant short-term resistances stands at 114.05 (23 Oct 2017 minor swing high area) follow by 114.40 (horizontal range top of May/Jul 2017 & 61.8% Fibonacci retracement of the multi-month decline from Dec 2016 high to Sep 2017 low).
- In the longer-term, the USD/JPY is still evolving in a complex range configuration in place since the start of 2017 as it is being capped by a major descending trendline resistance in place since June 2015 swing high (depicted in purple on the daily chart).
Key levels (1 to 3 days)
Pivot (key support): 133.20/06
Resistances: 114.05 & 114.40
Next supports: 112.40 & 111.65
Therefore as long as the 113.20/06 pivotal support holds, the USD/JPY may start to undergoing a potential bullish wave sequence within its on-going short-term uptrend in place since 16 October 2017 to retest the 114.05 minor swing high before targeting the next resistance at 114.40 in the first step.
However, failure to hold above 113.20/06 shall invalidate the short-term uptrend to trigger another round of corrective decline towards its next intermediate supports of 112.40 and 111.65.
Charts are from eSignal
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