Short-term technical outlook on USD/JPY (Tues 17 Jul)
- USD/JPY has started to consolidate in a minor bullish “Pennant” continuation range configuration since its 112.80 high of 13 Jul 2018 after its recent bullish breakout on last Wed, 11 Jul from its former major descending trendline from Jun 2015 high at 112.00.
- The aforementioned “Pennant” consolidation is now forming right above a key short-term support at 112.05 which is defined by the median line of the medium-term ascending channel from 26 Mar 2018 low, the minor ascending channel support from 09 Jul 2018 low and close to the 23.6% Fibonacci retracement of the recent up move from 25 Jun 2018 high to 13 Jul 2018 high of 112.80.
- Both the daily RSI and hourly RSI remains in positive configurations which suggests that the pair is likely undergoing a consolidation rather than a distribution process for a deeper corrective pull-back.
- The next significant short-term resistance stands at 113.55/80 which is defined by the swing high areas of 12/21 Dec 2017, the upper boundary of the minor ascending channel from 09 Jul 2018 low (depicted in green on the hourly chart) and a Fibonacci projection cluster.
Key Levels (1 to 3 days)
Intermediate support: 112.25
Pivot (key support): 112.05
Resistances: 112.80 & 113.55/80
Next support: 111.30
Therefore as long as the 112.05 key short-term pivotal support holds and a break above 112.80 is likely to reinforce the start of another potential upleg for USD/JPY to target the next intermediate resistance at 11355/80.
On the other hand, a break below 112.05 puts the bulls on hold for a deeper pull-back to retest the 111.30 pull-back support of the former major descending trendline resistance from Jun 2015 high and the former medium-term swing high area of 21 May 2018.
Charts are from eSignal
GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.