In my morning forecast, I paid attention to the level of 149.96 and planned to make decisions on entering the market from there. Let's look at the 5-minute chart and grasp the point what happened there. The decline and a false breakout there made it possible to obtain an excellent entry point into long positions. As a result, USD/JPY grew by more than 60 pips. In the afternoon, the technical picture was completely revised.
What is needed to open long positions on USD/JPY
Obviously, there are fewer and fewer sellers, especially after the news that the Bank of Japan is not going to take action with interest rates and raise them as actively as previously expected. It is best to act in a bull market during downward corrections that may occur after the release of US data. If case reports on building permits and housing starts are weak, USD/JPY will fall following the publication. A false breakout in the area of new support at 150.27 will be a suitable condition for opening long positions with prospects of further growth to the resistance area of 150.88. This level has not been tested today yet. A breakout and consolidation above this level will allow buyers to strengthen their positions in the market, giving them a chance to open long positions with a target at 151.21. The farthest target will be a high of 151.55, where I will take profit. In the scenario of a decline in the instrument and lack of buying activity at 150.27 in the afternoon, USD/JPY will come under selling pressure again. In this case, I will try to enter the market at about 149.87. But only a false breakout there will be a suitable condition for opening long positions. I plan to buy USD/JPY immediately during a dip from 149.51, bearing in mind a correction of 30-35 pips within the day.
What is needed to open short positions on USD/JPY
The sellers' chances are, to put it mildly, "not very good." In case of further growth in USD/JPY, I expect the bears to appear in the area of 150.88, where a false breakout will give a good entry point for selling with a movement to 150.27, the support formed in the late European session. A breakout and reverse test from the bottom to the top of this range will deal a more serious blow to the positions of the bulls, which will lead to the removal of stop orders and open the way to 149.87. A lower target will be the area of 149.51, where the moving averages are located, and where large dollar buyers will probably show up themselves. I will take profits there. If USD/JPY grows and there is no bearish activity at 150.88 in the afternoon, and this will happen following another portion of good statistics for the US, the market will continue the bullish trend. Therefore, it is best to postpone selling until the test of resistance at 151.21. If there is no downward movement even there, I will sell USD/JPY immediately during a rebound from 151.55, but only in anticipation of a downward correction by 30-35 pips within the day.
The COT (Commitment of Traders) report for March 12 showed an increase in long positions and a sharp decline in short positions. Judging by the decision of the Bank of Japan to raise interest rates and the sharp fall of the yen against the dollar, the regulator is not going to take action in the near future. Given that the market reacts to expectations rather than an actual policy move, it is not surprising why the US dollar rose sharply against the yen. Most likely, USD/JPY will extend its climb since the Federal Reserve, which now relies on inflation data, will make policy decisions in tune to its hawkish rhetoric. The latest COT report said that long non-commercial positions increased by 252 to 54,923, while short non-commercial positions decreased by 16,269 to 157,245. As a result, the spread between long and short positions increased by 1,755.
Indicators' signals
Moving averages
The instrument is trading above the 30 and 50-day moving averages. It indicates a further upward move in USD/JPY.
Note: The period and prices of the moving averages are considered by the analyst on the 1-hour chart and differ from the general definition of classic daily moving averages on the daily chart.
Bollinger Bands
In case USD/JPY goes down, the indicator's lower border at about 147.58 will act as support.
Description of indicators
Moving average (moving average, determines the current trend by smoothing out volatility and noise). Period 50. It is marked yellow on the chart. Moving average (moving average, determines the current trend by smoothing out volatility and noise). Period 30. It is marked green on the chart. MACD indicator (Moving Average Convergence/Divergence — convergence/divergence of moving averages) Quick EMA period 12. Slow EMA period to 26. SMA period 9 Bollinger Bands (Bollinger Bands). Period 20 Non-commercial speculative traders, such as individual traders, hedge funds, and large institutions that use the futures market for speculative purposes and meet certain requirements. Long non-commercial positions represent the total long open position of non-commercial traders. Short non-commercial positions represent the total short open position of non-commercial traders. Total non-commercial net position is the difference between short and long positions of non-commercial traders.