USD/JPY has been trending higher, confirmed by the market making higher highs and higher lows on the daily time frame.

The trend has slowed recently, should you draw any trend line they would all have been broken. There are two separate instances of divergence on the MACD, again showing the momentum slowing in the uptrend.

USD/JPY Daily Chart

USD/JPY Daily Chart

Nearest support and resistance levels

Support: 111.66 & 110.00
Resistance: 114.11

Given long term uptrend, there is still the opportunity to buy this market. Any reaction at the 111.66 support level and it would be expected to trade back to the resistance level and test the highs again. A reaction could be bullish daily candle or a short term bullish pattern, such as a double bottom or inverse head and shoulders.

The alternative would be to sell this market at resistance if it can get back to 114.11. The secondary indicator, MACD, indicates this market is expected lower, confirmed by the cross of the MACD and signal line to give a sell signal.

Conclusion

Medium term, we expect USD/JPY to test the 111.66 level, and should it break, test the 110.00 support zone. Waiting for the correct sell zone is important, selling in the middle of support and resistance is a gamble and will chop traders up. Waiting on sell zones also mean your stop loss are in safe places and cements a good risk to reward ratio.

Should the 111.66 hold, expect to see the highs tested and potentially broken with the next level at 115.00. Current trend is up, so if the 111.66 level holds and secondary indicators confirm, look to enter long position.

 

 

Disclaimer: This should not be used as investment advice and is only an opinion. Do your own research before looking to risk your own capital in the financial markets.


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