USD / JPY is trading at 114.71 after hitting 7/8 of murray in the European session. This area represents a level of technical reversal. The Japanese yen is likely to make a technical correction in the next few hours to the 6/8 of murray located at 114.06.
The weakness of the Japanese Yen has become more evident since September 20 when it was trading at 109.00. The pair gained strong bullish momentum when it managed to consolidate above the 21-day SMA, reaching price levels of March 2017, around 115.00.
The yen is losing its attractiveness as a safe haven due to the internal headwinds in the country and a decrease in exports to the United States and China. Investors prefer to take refuge in gold and other assets which is weakening the pair.
Another factor that could put the strength of the Japanese Yen at risk is that investors are waiting for a fiscal stimulus package for COVID-19 to be announced later this week.
This package is intended to reactivate the Japanese economy and in turn could further weaken the Japanese currency. So, we could see an upward movement in the short term towards the level of 118.00 or even to the psychological level of 120.00
According to the daily chart, the yen is likely to make a technical correction in the next few hours because it is highly overbought. The eagle indicator has reached the 95-point level which signals an imminent technical correction for the next few hours or days.
The key support zone is located at 114.06 and at 113.86 this level could offer a technical rebound to the yen to continue its upward movement to 8/8 of murray located at 115.62
The medium-term outlook continues to be bullish as long as it remains above the 200 EMA located at 110.25. Any pullback will be considered a technical correction and could be a good opportunity to continue buying the yen in the coming days.
Our trading plan is to sell below 114.84 with targets at 114.32 and up to 114.06, a consolidation above the 21 SMA located at 113.86 will be a signal to buy the yen again with targets at 115.62
Support and Resistance Levels for November 17 - 18, 2021
Resistance (3) 115.33
Resistance (2) 115.21
Resistance (1) 115.06
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Support (1) 114.55
Support (2) 114.29
Support (3) 114.06
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A trading tip for USD/JPY for November 17 - 18, 2021
Sell below 114.84 (7/8) with take profit at 114.55 and 114.06 (6/8) and stop loss above 115.21.