FX.co ★ Trading Signal for USD/JPY for August 12 - 13, 2021: Sell Below 110.54

One hour before the publication of the US inflation report, the yen rose to the level of 110.80. Following the data, the pair fell to the level of 23.6% of the Fibonacci retracement.

On the 4H chart, the USD/JPY pair is entering an overbought zone, the eagle indicator that measures the strength and volume of the market has come to signal a probable technical correction.

We have plotted the Fibonacci indicator from the low of 108.70 to the high of 110.80, the key reversal point is located at the level of 109.50. This will be the objective to wait for a technical correction.

The 21 SMA on the 4H charts is around 110.40. If the USD/JPY pair consolidated below this level. It would be entering the negative territory and there could be a bearish movement in the next few hours.

The support of the 200 EMA located at 110.15, will be an obstacle if the yen tries to break down, an upward rebound above that level is likely. If the downward pressure breaks the 110.15 level, a downward movement up to the 61.8% Fibonacci zone located at 109.50 is likely.

On a fundamental level, the Consumer Price Index (CPI) data fell to 4.3% in July from 4.6% in June. This data was discarded by the market because the previous days the US dollar had been strengthening. After the report, the yen regained momentum.

The US dollar index is under downward pressure after breaking the key level of 93.00 and consolidating below 6/8 of Murray. It is likely that in the coming days it will yield to the downside and this could help the yen to strengthen and fall up to the level of 109.50.

Support and Resistance Levels for August 12 - 13, 2021

Resistance (3) 111.20

Resistance (2) 110.99

Resistance (1) 110.70

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Support (1) 110.20

Support (2) 110.00

Support (3) 109.70

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Trading tip for USD/JPY for August 12 - 13, 2021

Sell if pullback 110.54 (7/8), with take profit at 110.15 (EMA 200), stop loss above 110.90

Sell if breaks 110.15 (EMA 200 and 6/8), with take profit at 109.70 and 109.50 (61.8%), stop loss above 110.50.