Heading lower on USD/JPY???

5 thg 5, 2020

USD/JPY:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

Since kicking off 2017, USD/JPY has been busy carving out a descending triangle pattern between 118.66/104.62. The month of March concluded by way of a long-legged doji candlestick pattern, ranging between 111.71/101.18, with extremes piercing the outer limits of the aforementioned descending triangle formation.

April was pretty uneventful, ranging between 109.38/106.35.

Areas outside of the noted pattern can be seen at supply from 126.10/122.66 and a demand coming in at 96.41/100.81.

Daily timeframe:

Brought forward from previous analysis -

Demand from 105.70/106.66 received price action last week after consolidating south of the 200-day simple moving average (SMA) at 108.28 since mid-April.

Thursday, as you can see, staged an impressive comeback from the aforesaid demand, snapping a six-day losing streak, though Friday fell flat with price action revisiting the said demand. Should the demand eventually abandon its position, we can look forward to demand plotted at 100.68/101.85 perhaps making an appearance.

H4 timeframe:

Partially altered from previous analysis -

A bearish pennant pattern between 106.92/108.07 took hold after having its lower boundary taken in recent weeks. Despite a modest recovery on Thursday last week, downside remains the favoured route, according to chart studies.

Traditionally, take-profit targets out of bearish pennant patterns are formed by measuring the preceding move (109.38-106.92) and adding this value to the breakout point (black arrows – 104.89).

Technical traders may also find use in noting the possibility of an AB=CD approach (orange), which completes at the top edge of H4 demand at 105.75/105.17, an area sited just above the bearish pennant’s take-profit target.

H1 timeframe:

Although we saw a fleeting move to 107 and surrounding supply at 106.99/107.16, enthusiasm was somewhat muted Monday.

Support can be found at the 106.50 band, while a run through 106.99/107.16 could see trendline resistance (108.04) make a show, along with supply formed at 107.40/107.29.

Structures of Interest:

As stated in Monday’s analysis:

Price action on the monthly timeframe could essentially pop either way. The response out of daily demand at 105.70/106.66, however, echoes a fragile tone, therefore 100.68/101.85 could be brought to light in the near future.

H4 price shows scope to navigate lower ground, possibly voyaging to demand at 105.75/105.17, followed by the bearish pennant take-profit target at 104.89. H1 flow could remain under 107, approaching 106.50 and beyond; alternatively, a break to supply at 107.40/107.29 may also draw sellers into the fight.