The 1-hour chart shows that USD/JPY is making a technical rebound from the previous day's low of 109.10 towards the psychological level of 110.00. We can observe the formation of an ascending wedge pattern, the breakout below the bottom line could be a bearish signal.
Yesterday, the US dollar strengthened, surpassing the 93.00 mark and in turn gave a downward momentum to the Japanese yen, weakening it from the 109.10 low to the 109.77, level of 5/8 murray.
According to the chart, the eagle indicator is showing an overbought signal, with an imminent technical correction for the next few hours. Given that this indicator measures the volume and strength of the market, we believe that there could be a fall below the 110.00 level and below 109.7.
The relevant data for this week will be published in a few hours, exactly at 2:00 p.m. ET. Investors are waiting for the publication of the minutes of the FOMC meeting. They will look for clues about the moment when the Fed will start reducing its asset purchases.
This data could be a factor that could help strengthen the Japanese yen, or it could fall to the level of 109.10 if the data is positive for the US dollar. Otherwise, the yen could continue its upward cycle to the level of 110.00.
For now, according to technical analysis, we can trade lower around 109.76 or wait for a pullback towards the resistance zone where the 200 EMA is located at 110.06. Both levels can give us a good opportunity to sell with the targets at 109.10.
Support and Resistance Levels for August 18 - 19, 2021
Resistance (3) 110.40
Resistance (2) 110.28
Resistance (1) 109.96
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Support (1) 109.42
Support (2) 109.15
Support (3) 108.88
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Trading tip for USD/JPY for August 18 - 19, 2021
Sell if there is a pullback to 110.00 (EMA 200), with take profit at 109.75 and 109.37(4/8), stop loss above 110.35.
Sell below 109.76 (5/8), with take profit at 109.37 and 109.10, stop loss above 110.06.