More USD/JPY – Technical Levels

Posted Tuesday, December 20, 2016 by
Skerdian Meta • 3 min read

In our previous update, we took a look at USD/JPY and what the price action has been telling us. The technical and fundamental analysis clearly paints a bullish picture as well as the price action. You can´t ignore an 180 pip surge overnight based on nothing. We have seen the forex market barely move 100 pips on important events, so such a move shows the huge difference between the USD/JPY buyers and sellers at this moment.

The price action tells us that buyers clearly outnumber the sellers, so we can´t ignore that. Our plan is to buy this forex pair on pullbacks lower, but first let´s see which support levels are strong enough to hold the price on pullbacks, and which resistance levels are strong enough to reverse the price or at least for a top on the short term.

The 117.80 level has been support and resistance last week

USD/JPY Support Levels – As you can see from the H1 USD/JPY chart above, the 117 level has provided some sort of resistance on Thursday last week when the uptrend was in full swing, following the FED interest rate hike. It turned into mild support after being broken, so that´s the first support level and we´re just a few pips above it. This means that I am looking to buy this forex pair now. I´m just waiting for the stochastic to get close to the oversold area, because as you can see it is heading down.

Maybe by the time the price reaches 117.40-50, which is where the 20, 50 and 100 simple moving averages (SMA) are, the stochastic indicator will become oversold. That would be a stronger buy signal since a number of technical indicators will be pointing up. However, we´ll have to wait and see how the price reacts down there before we jump in.

We might decide to stay out if the trade setup doesn't meet our criteria, but that´s a trading opportunity for you to keep in mind if you feel you might grab a few pips from it. Below there comes yesterday´s low at 116.50s, 11620 where the 50 SMA in the H4 USD/JPY chart stands, and 114.80-115.  

US/JPY Resistance Levels – The first two resistance levels can be easily spotted on the H1 forex chart without the need for a pair of glasses; it´s today´s high at 117.20's and last week´s high at 118.60's. We can use these nearby levels for short term forex trades, otherwise, we have to look at the bigger resistance levels.

We´re just below a long term support level which might turn into resistance

For further resistance levels, we have to switch to higher time-frame charts since we haven’t been in this war zone since January this year. As you can see, last week´s high around 118.50-60 used to be the support during most of last year, so this will be a tough level to overcome. But with the price action we have seen recently, I wouldn't be surprised to see it get broken today.

That said, we are heading towards the holiday season so forex traders might decide to call it a day and leave the tables until after the new year. As we said in yesterday´s update, don´t trust the trends too much during this period because the end of the year is a dangerous time to trade. 119 will be the next resistance level and, of course, 120 awaits higher up. Will we get there before Christmas? 

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