Today has been a great day for the USD against the JPY, producing a rally of over 75 pips. The movement has set up some interesting trade opportunities for the U.S. session close and Asian open.

Before setting up the technicals, there are several economic metrics due out of Japan around 5:50 PM EST. The statistics revolve around the trade balance and import/export levels. If you are in an open position, be sure to stay cognizant of these numbers.

Technical Outlook For The USD/JPY

A brief look at the daily chart gives us a clear picture of what is likely to transpire in the coming hours.

Daily Chart, USD/JPY

A few levels to be aware of:

• Resistance is present at the Oct. high of 113.43. This level will surely bolster market participation.

• We have seen prolonged consolidation between the Daily SMA and Oct. high.

• Downside support is present at the Daily SMA (112.48) and Bollinger MP (111.99).

• A recent Bollinger MP/Daily SMA crossover is present, signaling a shift in market sentiment.

Trade Idea: I am looking for a return to downside support levels in anticipation of the pending economic releases out of Japan. A short at market from 112.90, with a stop above today’s high +10 pips gives us a shot at a 1:1 position trade for a 25 pip profit.

Be sure to stay tuned for my colleague Rowan’s Thursday forex session preview. He will have the latest news and analysis covering the global currency markets.