106.50 echoes possible resistance

6 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. May, on the other hand, trades lower by 1.00%.

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:

Partially altered from previous analysis -

Scratching in its fourth successive daily loss Wednesday, USD/JPY dug in and burrowed further into the walls of demand from 105.70/106.66.

Should current demand eventually abandon its position, we can look forward to demand plotted at 100.68/101.85 perhaps making a show.

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.

Wednesday took April 29 low at 106.35, leaving buyers defenceless until reaching demand at 105.75/105.17, an area sited just above the bearish pennant’s take-profit target. Traditionally, take-profit targets out of bearish pennant patterns are formed by measuring the preceding move (109.38-106.92) and adding the value to the breakout point (black arrows – 104.89).

What’s also interesting from a technical viewpoint is a possible AB=CD bullish pattern forming around the top edge of the current demand.

H1 timeframe:

USD/JPY is currently enjoying some much-needed respite off 106, though for how long is difficult to forecast.

We could see recovery towards the point at which two H1 trendline resistances merge (yellow – 107.49/106.60); a move this far north could also see price stumble into resistance from 106.50.

Yet, under 106 demand at 104.65/105.20 is situated as the next support target.

Structures of Interest:

The response out of daily demand at 105.70/106.66 echoes a fragile tone, therefore 100.68/101.85 could be brought to light in the near future.

H4 price shows scope to demand at 105.75/105.17, followed by the bearish pennant take-profit target at 104.89.

H1 flow holds 106, bidding to regain some lost ground and perhaps cross paths with trendline resistance around 106.40. This base, together with 106.50, will likely interest sellers if we reach this far north today.