USDJPY Ichimoku Cloud Analysis: Tenkan Crosses Kijun

Fed’s rate announcement hurricane has passed, and the the force seems to be with USD. Which is why I’m conducting a USDJPY Ichimoku cloud analysis . There is something cool happening here (cooler than May the 4th) and you’ve got to pay attention. But of course, technical analysis alone won’t take us any where. The IDDA does. I’ll be sharing my final thoughts in our investing group‘ live webinar.  

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1- Fundamental Points

The first point of the IDDA suggests looking at the fundamentals of everything that could impact the currency pair. That should be done before conducting the USDJPY Ichimoku cloud analysis. Here we go.

US Side: Transitory. That’s how the Fed apparently sees the not-so-impressive economic data in April. How would market participants translate it into? Exciting.

The US dollar got bought into after the news. Because, market participants think the Fed will now start shrinking their balance sheet.

This excitement was despite the fact that the Federal Reserve voted NOT to raise its key interest rate, expressing  concern with the pace of economic growth.

Talking about seeing the glass half full, eh?

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Coming up:  Another NFP report is coming our way this Friday (May 5, 12:30 pm GMT)

Japan’s Side:  It’s Golden Week in Japan baby! One of my favorite holidays during my seven years in the Land of the Rising Sun. Guess what happens during this holiday week? Almost all Japanese business people go on vacation. Which leads to low trade volumes, low liquidity and low interest in Mr. Japanese Yen himself.

No wonder the US dollar is winning the USD/JPY forex dance.

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This brings us to the second point of IDDA: Technical analysis.

2- Technical Points: USDJPY Ichimoku Cloud Analysis

Daily Time Frame: We already have the first point confirmed when it comes to USDJPY Ichimoku Cloud analysis. The Kijun line has crossed above the Tenkan line on the daily time-frame.

At the time of writing, which is early during the Asian session, the pair is testing and teasing the upper band of the cloud. This level, 112.79 also happens to be a previous support for the USD/JPY pair, which make it that much more important.

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USDJPY Ichimoku Cloud Analysis – Daily Chart

The pivot zone is between 112.84 and 111.68.

Monthly Time Frame: On the monthly chart, the pair has formed a gigantic bullish engulfing. It appeared after April’s super indecisive Hammer Doji candle. The pair remains above the monthly Ichimoku cloud.

USDJPY Ichimoku Cloud Analysis – Monthly Chart

We have set the Fibonacci levels here from the bottom of the most recent uptrend to the top of it, from September to December 2016.

3- Market Sentiment

Market sentiment analysis is the 3rd point of the IDDA. By the end of Tuesday’s New York session, retail trader data showed 56.9% of traders are net-long the USD/JPY pair. In fact, traders have remained net-long since Jan 09 when USDJPY traded near 117.828; price has moved 5.4% lower since then. The number of traders net-long was 6.0% lower than Monday though.  And 25.0% lower from last week

.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests USD/JPY  could continue to fall. It makes sense, because we have the NFP coming up and the crowd could start taking profit.

On the other hand, positioning is more net-long than Monday, but less net-long from last week.

This brings confusion back on the table. Too sentimental.

Trading Strategy Based on USDJPY Ichimoku Cloud Analysis

As 4th point of the IDDA, you must calculate your risk tolerance before deciding on which trading strategy is suitable for your portfolio. Join us for a free MasterClass to learn more.

Disclaimer: Forex is one of the HIGHEST risk investment types there is.  If you believe you have low risk tolerance, try expanding into other investment types.

With the NFP coming up tomorrow, it is important to set your strategy up before hands. You must apply all points of the IDDA and develop a strategy suitable for your portfolio and risk tolerance at this time. I’ve already shared a multi-level strategy for our group members during our live class this morning. For further help, and if you want to chat with me regarding your trades, join our investing group, or become a PowerCourse member. They’re both awesome!!

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

Support Levels Turning Point Resistance Levels
107.32 111.68 114.29
109.41 112.84 115.73

May the forth be with you and your trades!

xoxo

Kiana

P.S. Feeling down? Here is my 3-step life hack when I feel low.

P.P.S Reserve your seat in our FREE MasterClass: 3 Secrets to Making Your Money Work for YOU

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