Yahoo Finance USD/JPY Forex Technical Analysis – Another Stock Market Rout Could Lead to Plunge Under 106.369
The Dollar/Yen broke sharply on Wednesday in reaction to a steep drop in U.S. equity markets late in the session. Stock market liquidation forced investors to sell the dollar and buy the Yen due to the carry trade. Losses may have been limited by firm U.S. Treasury yields.
On Wednesday, the USD/JPY settled at 106.674, down 0.642 or -0.60%.
Daily Technical Analysis
The main trend is down according to the daily swing chart. A trade through 106.369 will signal a resumption of the downtrend. This could trigger a further break into the February 16 main bottom at 105.540.
A trade through 107.670 will change the minor trend to up. A move through 107.898 will change the main trend to up.
The main range is 109.778 to 105.540. Its retracement zone at 107.659 to 108.159 is currently acting like resistance. It stopped a rally at 107.898 on February 21 and on February 27 at 107.670.
The USD/JPY is also trading inside a major long-term retracement zone bounded by 108.773 to 106.440. Trader reaction to this zone will determine the longer-term direction of the market.
Daily Technical Forecast
Based on Wednesday close at 106.674, the direction of the USD/JPY on Thursday is likely to be determined by trader reaction to the short-term uptrending Gann angle at 106.103.
A sustained move over 106.103 will signal the presence of buyers. If this move begins to gain traction then we could see an acceleration to the upside with the next potential targets the short-term 50% level at 107.659, an uptrending Gann angle at 106.665 and a downtrending Gann angle at 108.841. Since the main trend is down, sellers are likely to show up on a test of this area in defense of the 107.898 main top.
A sustained move under 106.103 will indicate the presence of sellers. This could trigger a quick break into the major Fibonacci level at 106.440 and the main bottom at 106.369.
The daily chart opens up to the downside under 106.369. This could trigger a move into the next uptrending Gann angle at 105.821. This is the last potential support angle before the 105.540 main bottom.
This article was originally posted on FX Empire
