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Posts: 4

Topic: Forex & Commodities Analysis

USD/JPY Weekly Outlook

USD/JPY has been trending lower but is approaching support around the 105 handle. This support area held it higher on two dips over the last two years or so.

https://www.thegoldanalyst.com/charts/USDJPYWeeklyAug10.png

I think it is possible that we see a bounce from here. However, the trend is down and so I think there would need to strong confirmation of a turn.

On a rally, I have identified 106.78 as resistance for the week. This level marks the June low and acted as resistance earlier this month which can be seen on the 4-hour chart below.

https://www.thegoldanalyst.com/charts/USDJPY4HAug10.png

High Impact events in the upcoming week:
TUE - USD CPI & Core CPI
THU - USD Retail Sales & Philly Fed Manuf

Re: Forex & Commodities Analysis

USD/JPY Weekly Outlook

In the past week, USD/JPY mostly respected the levels I was looking at and had indicated in my last post. It bounced slightly ahead of support near 105 and topped at 106.78 resistance. The support area near 105 is a major area for the pair as indicated by the weekly chart in the previous post. Nothing has changed from that perspective, and considering the support, I think we might try and recover a bit further.

https://www.thegoldanalyst.com/charts/USDJPY4HAug17.png



On the 4H chart above, I have identified support at 105.73 for the week ahead. Resistance remains at 106.78. If the pair holds above the support level, there is potential for further gains. i do think that dips should be bought ahead of the support level. At this stage, if it attempts to once again test support, I would view that as weakness more than anything, even if it holds.

If the pair manages to break above 106.78, I've marked off a target at 107.83. However, a break above the level would activate a potential inverted head and shoulders. As long as it holds above 105.73 that is. A measured move targets would be well above that resistance level.

Re: Forex & Commodities Analysis

USD/JPY Potential Inverted Head & Shoulders Pattern

The chart below shows the mentioned pattern. It will take a break above 106.78 to confirm it. The symmetry of the inverted head & shoulders is not perfect. The left shoulder developed much faster than the right. Nevertheless, I think the pattern carries good potential.

Measured move targets for the inv. H&S fall around 108.50 which is well above the resistance level of 107.83.

https://www.thegoldanalyst.com/charts/USDJPY1HAug17.png

Re: Forex & Commodities Analysis

Last week's inverse head and shoulders did not play out, although USDJPY came very close to breaking the neckline of the pattern several times. The pair posted a loss last week with a bulk of the decline on Friday on the back of an escalation in the US/China trade war.

Friday's price action was typical risk off with gold, yen, and bonds are rallying together. Some of this sentiment has continued into the weekly open, probably as a result of some tweets sent out after market close on Friday by the US president.

Price action this week will be important, mostly because of correlations. To start, a further sell off in risk assets would (likely) mean a downside break in the S&P 500 that has been playing out for most of the month. And that kind of break would signal a more prolonged episode of risk aversion.

For now, we are looking for 104.64 support to hold in USD/JPY. This marks the 2018 low. So far, an early day rally was already capped at 105.73 and this remains resistance. It may require a catalyst to for a break below support here, and in the absence of one, it is likely a range develops.

http://www.thegoldanalyst.com/charts/USDJPYDailyAug26

For more analysis on risk assets, please visit The Gold Analyst

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