FX.co ★ Trading Signal for USD/JPY for August 04 - 05, 2021: Buy above 108.59

The Japanese Yen is trading within a downtrend channel. Before opening of the American session, USD/JPY is consolidating in the 3/8 murray zone around 108.98 ahead of ADP employment report in the US which is expected to show an increase in jobs greater than 600,000.

USD / JPY is looking strong and is likely to continue its bearish cycle to the strong 2/8 murray support zone located at 108.59. The US dollar is expected to extend weakness that could contribute to the yen's advance.

The dominant short-term outlook for USD / JPY remains bearish, so a pullback to the top of the bearish channel around 109.37 will be a good opportunity to sell.

On the other hand, in case of a break below the 3/8 murray line, the downward pressures would again intensify and push the price towards the 2/8 murray support at 108.59.

At the 2/8 murray level, it will be a good opportunity to buy as this is the level where USD / JPY is expected to enter the overbought zone and there could be a good technical rebound.

The 4-hour chart shows that the pair still has space to decline as the eagle indicator is approaching the 10-point zone, to mark an oversold level.

Falling US Treasury yields and risk aversion make investors take refuge in the Japanese Yen. So, they are selling the US dollar and buying the yen, waiting for it to strengthen. This activity has been going on for a lengthy period.

The technical reading of the eagle indicator, which measures market strength and a trading volume, is generating a bearish signal pointing to a decline in the Japanese yen towards support levels of 108.59.

Support and Resistance Levels for August 04 - 05, 2021

Resistance (3) 109.74

Resistance (2) 109.54

Resistance (1) 109.27

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Support (1) 108.80

Support (2) 108.60

Support (3) 108.34

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Trading tip for USD/JPY for August 04 - 05, 2021

Buy if rebound 108.59 (2/8), with take profit at 109.37 (4/8), stop loss below 108.25.

Sell below if pullback 109.37 (4/8), with take profit at 108.98 and 108.59 (2/8), stop loss above 109.72.