Markets Analysis

Fundamental Analysis

• USDJPY has plummeted to the 146 range, marking a drop of over 300 pips in just four days.
• The unemployment rate in the US has risen to a 2-year high according to the employment statistics, and stock prices have also been weak.
• The RSI for USDJPY has fallen below 50 for the first time since January, signaling the end of the uptrend.

USDJPY Technical Analysis

Analyzing the daily chart of USDJPY, it has hit the 200-day moving average and closed around 147. The rapid decline is attributed to anticipated yen buying ahead of the Bank of Japan’s meeting on the removal of negative interest rates, an increase in the US unemployment rate leading to dollar weakness, and comments on interest rate cuts by Federal Reserve officials.

USDJPY has broken below its previous highs, indicating the end of the uptrend. Moreover, the RSI has fallen below 50 for the first time since January, now at 41, indicating a downtrend.

Currently, the Ichimoku cloud lies below, making it difficult to break through swiftly. Some rebound is likely, possibly returning to the mid-148 range. However, fundamentally, a direction towards a stronger yen and weaker dollar seems probable.

Day Trading Strategy (1-Hour Chart)

Analyzing the 1-hour chart of USDJPY, the downtrend continues. The conversion line of the Ichimoku cloud has acted as resistance, and after reaching a low of 146.50 JPY, it has finally surpassed the conversion line. However, it has not surpassed the baseline.

The price reaching 146.50 JPY, a significant price level, indicates that a rebound for adjustment wouldn’t be surprising. Drawing Fibonacci retracement levels, 38.2% corresponds to 148.15 JPY and 50% to 148.65 JPY, which are expected to form the rebound highs.

The day trading strategy is to sell on the rally. Wait until it reaches the 148 range before entering a sell position. The plan is to wait for the 1-hour RSI to return to around 50 before gradually increasing sell positions from 148.15 JPY to 148.50 JPY. If it surpasses 148.80 JPY, it indicates a different trend, and a stop loss should be placed.

Support and Resistance Lines

Key support and resistance lines to consider are as follows:

146.50 JPY: Monthly support line

Market Sentiment

USDJPY Sell: 9% Buy: 91%

Today’s important economic indicators

*Trading advice in this article is not provided by Milton Markets, but by Shu Fujiyasu Jr., a certified technical analyst.