Forex technical analysis: USDJPY moves toward 50% retracement target

Technical Analysis

Author: Greg Michalowski | usdjpy

Marching higher with little in the way of a correction

The USDJPY is marching higher after the much better than expected data.

Looking at the daily chart, the pair next looks toward the 50% of the move down from the 2015 high. That comes in at 112.433.  That 50% level is in the middle of a congestion range from the Feb/March 2015. The high in that range peaked at 114.86. The low was 110.65 (midpoint around 112.76). 

The 50% tends to give traders cause for pause.  After a big move, the most likely sellers would be profit takers who are feeling good (and more profitable) after the  fast and directional trending market.  Having said that, if trends get going and traders sell on the way up, they fuel the fire by covering as each target is taken out. So on a break of the level, expect stops.  The high has reached 112.38 so far. 

What might turn the trend move around?
  • Holding the 50% AND
  • A move below the 112.16-23 area. 
The 112.16-23 is the absolute minimum to show that the sellers are taking back more control. It represents the 38.2-50% of the last trend leg higher (from 111.877 to the high - see chart below). 

In other markets, the 10 year yield is up to 2.382%.
Pre-market stocks have the S&P futures down -5.5 points. The Nasdaq futures are down -18 points. The Dow Futures are trading down -13.00 points.

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