udsjpy potential final push up towards 112 0020 before risk of minor reversal 1850292017

The USD/JPY had managed to stage a steep rebound from the 108.40/108.00 support (1.00 time Fibonacci projection of the decline from 02 Jan 2017 high & the lower boundary of the descending channel in place since 02 Jan 2017 high) which was reinforced by the positive optimism triggered by the results of the 1^st round of French presidential election.

Now, let’s us take a look at the latest technical elements on USD/JPY ahead of today’s BOJ monetary policy action which is expected to be  status quo.

Short-term technical outlook on USD/JPY

(Click to enlarge charts)

Key technical elements

• The USD/JPY has managed to stage a rebound from the 108.40/108.00 support (1.00 time Fibonacci projection of the decline from 02 Jan 2017 high & the lower boundary of the descending channel in place since 02 Jan 2017 high) and reinforced by the positive optimism of the
• The key short-term resistance now stands at 112.00/122.20 which is defined by the former range support from 07 February/27 February 2017, the upper boundary of a short-term ascending channel in place since the minor swing low of 22 April 2017 and a Fibonacci cluster  (see daily & 1 hour charts).
• The daily RSI oscillator has turned positive as it has broken above its resistances. In addition, the shorter-term Stochastic oscillator has inched upwards and still has room to manoeuvre to the upside before it reaches an extreme overbought level. These observations suggest that short-term upside momentum remains intact.
• Based on the Elliot Wave Theory and fractal analysis, the USD/JPY is likely in the midst of undergoing the potential minute degree final upleg wave v of a minor degree impulsive wave a/ that is in place since 17 April 2017 low. The potential end target of the wave a/ stands at the 112.00/112.20 zone.  These observations suggest that the USD/JPY faces the risk of a short-term bearish countertrend movement at the 112.00/122.20 zone (see 1 hour chart).
• The key short-term support rests at 110.83 which is defined by the pull-back support of the bullish breakout from former ascending channel’s resistance (from 17 Apr 2017 low)  and the 23.6% Fibonacci retracement of current up move from 17 April 2017 to 27 April 2017 high.

Key levels (1 to 3 days)

Pivot (key support): 110.83

Resistance: 112.00/112.20

Next support: 110.53 & 109.56/40

Conclusion

As long as the 110.83 short-term pivotal support holds, the USD/JPY may see a residual push up to target the 112.00/112.20 resistance before a potential minor bearish reversal occurs.

However, failure to hold above 110.83 is likely to negate the preferred short-term bullish tone for a slide to test the 110.53 support. Only an hourly close below 110.53 may trigger the start of the deeper decline towards the 109.56/40 support zone.

Charts are from eSignal

Disclaimer

This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this email, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs. All queries regarding the contents of this material are to be directed to City Index, a trading name of GAIN Capital Singapore Pte Ltd.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit cityindex.com.sg for the complete Risk Disclosure Statement.