On October 15, the USD/JPY pair reached a high of 114.45 amid the strengthening of the US dollar and the US indices. Demand for riskier assets is high again which is bearish for the yen as a safe-haven asset.
The yen was trading at 114.45 last time on September 30, 2018. From this level, it had a downward cycle. Now, it is approaching it after 3 years. It indicates a strong resistance level at 114.50. Since 2004, the 114.50 zone has acted as a psychological level for investors. There have been many bounces above or corrections below, becoming a monthly pivot point.
According to the 4H chart, the USD/JPY pair has been trading within a negative trend channel since September 21. This upward cycle continues to prevail until now. Last week it touched the top of the bullish channel. The eagle indicator has reached the level of 95, which represents an imminent downward correction in the next few days.
The eagle indicator is showing an overbought level. It is likely that there will be a downward correction in the next few hours towards the support level of the SMA of 21. At this level, we expect a rebound to test the monthly resistance level of 114.50.
On the other hand, if a pullback occurs towards the top of the bullish channel or towards the strong monthly resistance of 114.50 and if it fails to consolidate above this level then it will be a good opportunity to sell below that level with targets at 114.06 there is located 6/8 of Murray and up to the SMA of 21 at 113.75.
The short-term outlook remains bullish. As long as the USD/JPY pair remains above the 200 EMA located at 111.42. Any technical bounce towards this level will be an opportunity to continue buying with targets. at 112.50 (4/8), 113.28 (5/8), and up to 114.50.
Our forecast is to sell below 114.50, targeting 113.75 if the downward correction continues. The decline is expected to continue to the bullish channel support at 112.70. Or on the contrary, if the yen tests the resistance of 114.50 and trades below this level then it will be a good opportunity to sell with a target of 112.90.
Support and Resistance Levels for October 18 - 19, 2021
Resistance (3) 115,09
Resistance (2) 114,84
Resistance (1) 114,59
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Support (1) 114,06
Support (2) 113,75
Support (3) 113,27
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A trading tip for USD/JPY for October 18 - 19, 2021
Sell if pullback or below 114,50, with take profit at 114,06 and 113,75 (SMA 21), stop loss above 114,85.