Today is Sun, November 19, 2017 13:14:21 GMT
RSS Follow Us Follow us on Twitter Friend us on Facebook
Contributors Top Trade Idea For October 1st,2014 – USD/JPY

forex_logoThe USD/JPY pair has finally entered the key 110.00-110.65 technical area (see monthly chart in figure 1). The lower end of this range, i.e. 110, is a key psychological barrier while the 110.65 level was the high achieved back in August 2008. Around these levels I would expect to see some profit-taking, which may apply some downward pressure on the currency pair, especially as we have several important US data releases coming up this week, including Friday’s nonfarm payrolls report.At this stage, it is difficult to say how deep price may retrace if we do see some actual selling activity. But with the economic fundamentals stacked against the bears, one would expect the potential losses to be limited. Indeed, in the medium-term the USD/JPY should, in theory anyway, rise further as the Fed normalises the US monetary policy while the BoJ maintains its ultra-loose stance.  In the very short-term, should the NFP trounce expectations then we may see a continuation of the dollar rally anyway, especially on the USD/JPY pair which has already broken a major bearish trend line. Still, a degree of caution is probably wise around these elevated levels and at such an important time of the month.

A quick look at the 4-hour chart of the USD/JPY (figure 2) shows the trend is still defiantly bullish, with price making higher highs and higher lows. The short-term bullish trends are still intact and no major support level is broken yet. So, for now at least, the path of least resistance continues to be to the upside. But should some of the support levels start breaking down soon then we may see the move accelerate to the downside as more and more traders are forced/encouraged to liquidate their long positions. Some of the immediate support levels to watch include 109.30 and 108.25, levels that were formerly support and/or resistance.  Meanwhile the next major bullish target is the 78.6% Fibonacci retracement level of the downswing from the 2007 peak, at 113.70/5.

 untitled

Source: FOREX.com

untitled

Source: FOREX.com

About Fawad Razaqzada

fr

Fawad is FOREX.com’s technical analyst based in London. He entered the FX market in early 2010. Having graduated from Brunel University with a degree in economics, and mentored by some of the industry’s leading experts, he has an excellent understanding of the fundamental drivers of the markets. But it is his unique ability to predict price moves using technical analysis that has made him popular amongst his peers. Fawad is regularly quoted in the leading financial publications such as the Wall Street Journal, Reuters, Market Watch, FT and Associated Press. On a day to day basis, Fawad produces and delivers market commentary and research for FOREX.com, with an emphasis on technical analysis. He achieved his CISI Level 3 Certificate in Investments (Derivatives – Retail) in early 2011.

Recent posts by Fawad Razaqzada