DominikStone

A closing breakout above 110.00 on a strong bull candle.

FX:USDJPY   U.S. Dollar / Japanese Yen
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A closing breakout above 110.00 on a strong bull candle is certainly a positive signal on USD/JPY . This continues the recovery trend on the dollar and shows that consolidations continue to be bought into. Momentum indicators are ticking higher, although perhaps there is a less effusive response than maybe could have been seen, however there is still further upside potential within this move. The initial resistance of the February high of 110.47 has just limited the move higher initially, but the bulls will be looking to take out this resistance which would help to further break the shackles. This would then open the next resistance between 111.50/112.00. The Daily chart shows strong momentum and that intraday weakness is a chance to buy. There is breakout support now 109.80/110.00 as an initial buffer to the downside, with 109.15 now a higher low above the key reaction low at 108.60.
Comment: The strength of the trend higher continues to pull the market through overhead resistance as the pair pulled above 110.47 yesterday to break the February high. The breakout from the consolidation band 108.60/110.00 implies 140 pips of upside and a push towards the next resistance at 111.50 and the run of positive candles suggests that the bulls remain in control for this move. Although on an historic basis Dollar/Yen tends to be a pair that trends strongly, perhaps the one caveat with the continued push higher is that the RSI is now above 70 and at a 12 month high. Can it sustain constant buying pressure? The bulls will point out that intraday corrections remain a chance to buy, with the trend support now in a confluence of support around 110.00 which is also where the latest breakout support is. The daily chart shows the potential for an initial slip back today, however with the strong configuration of momentum, weakness is a chance to buy which could help to renew upside potential. Initial resistance is at 111.00 this morning but a move towards 111.50/112.00 should not be ruled out.
Comment: One more the bulls have coming into the new week with a spring in their step, as the market makes further strong gains. The breakout above 110.47 took a pause for thought on Friday with the marginal uncertainty that comes with a doji candle, however any sense of impending consolidation has been dispelled again today. The bulls are pushing on with the uptrend, which comes in today at 110.10. Momentum indicators remain positively configured and the RSI is now pushing into the mid-70s, which is the strongest since December 2016, a time during which the market added over 15 big figures in just over a month. We are not in that sort of territory yet, but it just helps to show that when Dollar/Yen trends, it really can move. The next resistance is at 111.50 and there is a band of resistance 111.50/112.00. The daily chart shows the market is perhaps a touch stretched this morning coming into the European session, whilst any unwinding move is a chance to buy. There is a good band of support building 110.60/111.00 now.
Comment: Dollar/Yen continues to move higher within its eight week uptrend whereby corrections are seen as a chance to buy. The market just shied away from a test of the resistance around 111.50 yesterday however still formed a positive candle and there is as yet little to suggest that the run higher is set to end. Near term consolidations have been seen along the uptrend which currently comes in around 110.25 so there is room for a near term pause for breath. Momentum indicators have been strongly configured for several weeks during the trend, with the RSI holding up above 60. Old breakouts have been seen as an area of underlying demand and a basis of support to work from, so currently the bulls will be looking around 110.50. The Daily chart shows that this slip of 60 pips has unwound momentum and should now be around where the bulls look to regroup, so today’s session will be an interesting gauge of the near term outlook.
Comment: The eight week uptrend is again being tested. This sort of situation has been seen on several occasions during the run higher, but an early move lower has today has now seen the market drop back around 100 pips from the recent high of 111.40 right back to the uptrend which comes in around 110.40 today. Old breakouts are supportive and there is a run of higher lows in place that means underlying demand is in place to help bolster support. The first reaction low is at 110.00 and it will be interesting to see how strong this uptrend proves to be now. The hourly chart shows how this is an important test for the bulls now, with hourly momentum indicators creaking and threatening to turn more corrective. There is now a band of near term resistance between 110.80/111.20. Below 111.00 is the old key breakout support at 110.47.
Comment: A dramatic turnaround with a flood into the safe haven of the yen has come to pull Dollar/Yen sharply lower. Yesterday’s sharp bearish candle has continued into today’s session and the bull run is being quickly reversed. The eight week uptrend has been broken, along with the breakout support at 110.00 and the market is trading below the support of the rising 21 day moving average (c. 109.80) for the first time since early April. The momentum indicators have also significantly deteriorated, with the RSI at a six week low. The market is now posting lower highs and lower lows to begin the build of a new downtrend. Yesterday’s intraday rebound failed at 110.30 and with the hourly chart in negative configuration there is a sense that at least for the near term, rallies are now a chance to sell. The next support to test is 109.15 with the 108.60/108.80 support band now a key gauge for how strong this selling pressure will become. Resistance near term at 110.00/110.30.
Comment: Another positive candlestick yesterday and the bulls are looking to continue the renewed positive intent built up in recent sessions. There is an old pivot of recent weeks at 110.00 which will be seen as a key gauge now as a decisive close above it would re-open the May highs and old resistance around 111.50. Momentum indicators are certainly ticking higher once more. The Daily chart shows a far more positive near term configuration now with intraday corrections being bought into. There is good support now at 109.40. Initial resistance is at 110.30.
Comment: The improvement in risk appetite continues to reflect on Dollar/Yen which is once more testing the five week pivot at 110.00. Yesterday’s small doji candlestick which could not breach 110.00 reflects the consideration the market is giving to this pivot, and once more today this is still a factor. However the momentum indicators are hinting at further improvement, even if the impetus in the run higher has just waned slightly. A decisive closing move above 110.00 would be a key move. This is shown on the Daily chart which reflects positive near term momentum configuration with intraday corrections being bought into. The basis of support is at 109.40 which is growing in importance. Above 110.00 there is minor resistance around 110.50 but the next real resistance is at 111.40/50.
Comment: The dollar has been suffering across major pairs recently, but at least it has been outperforming the yen. However that is being questioned early today as the market has dropped back below 110.00 support. There has been more of a drift higher than a surge, and the momentum indicators are reflective of this on the hourly chart. Closing above the pivot at 110.00 should have been a positive signal for the bulls and now this early slip today means that this is a key test of intent. In the past six sessions there has been a run of higher daily lows, meaning that yesterday’s low at 109.77 is a key level to watch today. A break back below this level would now be a disappointment in the recent recovery. The Daily chart shows the key support to watch is around 109.40 which has been a floor in the past few sessions. In this time the hourly momentum indicators have all been positively configured, but this is being tested today. Also if the market falls below the rising 89 hour moving average (currently 109.80) it would also be a concern. Resistance at 110.25 initially.
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