USDJPY Hits Fibonacci Resistance – Forex Trading Outlook

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USDJPY Hits Fibonacci Resistance – Forex Trading Outlook

USDJPY Hits Fibonacci Resistance – Forex Trading Outlook

After breaking above the Ichimoku cloud and confirming a bullish reversal beginning of November, USDJPY hits Fibonacci resistance. This could cause the pair to stop and hang around the area for a while.  Read on for an IDDA approach… As well as different scenarios that you can trade the pair in a medium and long basis.

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Technical Analysis | USDJPY Hits Fibonacci Resistance

Daily Chart: The USD/JPY pair confirmed a bullish reversal after the US elections. The market kept up with the sentiment in the past two weeks. The naughty pair broke above a number of serious resistance levels such as the  Ichimoku cloud, the pivot of 105.25, and 38% Fibonacci retracement level of 108.70. While Invest Diva students enjoyed our trading strategies and kept on making juicy pips, we may now have hit a barrier: The King of Fibonacci levels, the 50% retracement.

The pair started Monday’s Sydney session below this resistance level with a bearish sentiment. Keep in mind that this level acted as a resistance twice this year before this, back in May and April 2016. Also looking at USD/JPY price action habit, it normally likes to consolidate and rest a little bit after massive trends.

Monthly Chart:  The pair remains supported by the massive Ichimoku cloud on the monthly chart. Long term resistance is set at 117.50.

Fundamentals | USDJPY Hits Fibonacci Resistance

It’s Thanksgiving holiday week in the US! Historically, Thanksgiving week creates a drain on liquidity. This could mostly impact the US dollar crosses, including USD/JPY.

However we can’t help but notice that Ms. USA’s performance these past weeks has been crazy.  The so-called US President Elect ‘Trump Rally’ pushed ICE’s Dollar Index (DXY) to 10 consecutive days of climb – the longest bull run since June 2013 – to reach highs not seen in over 13 years.  On the other hand, Mr. Japanese yen’s weakness also persisted as speculation grew that climbing bond yields would finally force the BOJ to put its so-called “QQE With Yield Curve Control” framework into play.

A holiday-shortened week for North American markets could shift focus to Japan. During the Asian session on Monday Japan’s  All Industry Activity Index will be released at 4:30 AM GMT followed by their Convenience Store Sales (YoY) (OCT) at 7 AM. 

More on the Economic Calendar…

Monday: Not much to expect during the London session. During the New York session, we have Canada’s Wholesale (MoM) (SEP) released at 1:30 PM GMT.  ECB’s Draghi Speaks at European Parliament  at 4 PM GMT which could potentially create volatility in the EUR crosses.

Market Sentiment | USDJPY Hits Fibonacci Resistance

On Friday only 38% of traders were still bullish on the USD/JPY pair in one of the largest FX brokers in the US. We use this as a contrarian indicator to price action,  the fact that the majority of traders were short gives signal that the USDJPY may continue higher.

However open interest seems to have changed beginning of Monday’s trading session. The combination of current sentiment and recent changes gives a mixed trading bias.

Trading Strategy | USDJPY Hits Fibonacci Resistance

Putting the technical, fundamental and sentimental points of the IDDA approach together, we are a bit mixed on USD/JPY for now. If you were short/ medium term bullish on USD/JPY, depending on your risk tolerance you could consider taking profit now.

Bullish Scenario:

A break above 111.50 could open doors for further gains towards 115 and 117.50 in extension

Bearish Scenario:

Failure to break above 111.50 would give range-traders a medium-term chance with support set at 108.70

Stay tuned for market updates and signals on our premium closed Investing Group. As always, when in doubt, book a private session with me to get your portfolio on track.

Here are Invest Diva’s calculations for important USD/JPY approximate levels to keep an eye on:

Support Levels Turning Point Resistance Levels
103.50 108.70 111.50
105.25 111.50 115


Kiana 喜愛成
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