USD/JPY Forex Technical Analysis – Strengthens Over 109.938, Weakens Under 109.876

The Dollar/Yen is trading higher on Wednesday as a slight decline in the number of new coronavirus cases lifted risk appetite. The number of new virus cases fell for a second straight day, even as the death toll in mainland China crossed 2,000 on Wednesday.

Investors read that news as a positive along with hopes that China would roll out more stimulus to support its virus-hit economy, especially for a cut in its benchmark loan prime rate due to be announced on Thursday.

At 07:29 GMT, the USD/JPY is trading 110.101, up 0.222 or +0.20%.


Daily Technical Analysis

The main trend is up according to the daily swing chart. A trade through 110.133 will signal a resumption of the uptrend. The main trend will change to down on a more through 108.313. This is highly unlikely, but we will be watching for a closing price reversal top if the stock market turns lower.

The minor trend is also up. A trade through 109.619 will change the minor trend to down and shift momentum to the downside. This is followed closely by a second minor bottom at 109.534.

The minor range is 110.133 to 109.619. Its 50% level or pivot at 109.876 is providing support today.

Daily Technical Forecast

Based on the early price action, the direction of the USD/JPY the rest of the session on Wednesday is likely to be determined by trader reaction to the price cluster at 109.938 to 109.931.

Bullish Scenario

A sustained move over 109.938 will indicate the presence of buyers. If this move generates enough upside momentum then look for the buying to possibly extend into the last minor top at 110.133.

Taking out 110.133 will indicate that the buying is getting stronger. This could lead to a test of the main top at 110.290. Taking out this level will signal a resumption of the uptrend with the next major target the May 21, 2019 main top at 110.677.

Bearish Scenario

A sustained move under 109.931 will signal the presence of sellers. Crossing to the weak side of the minor pivot at 109.876 could trigger an acceleration to the downside with the next targets the minor bottoms at 109.619 and 109.534.

This article was originally posted on FX Empire


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