USDJPY has been trading higher for the past couple of weeks. I think the pair is heading towards the 103.40 level, where the pair might struggle in the short to medium term. There is a stiff resistance at around the 103.40 and 103.80 levels, as highlighted in the daily chart show below. RSI is coming closer to the extreme levels at around the 80 level, which suggests that there might be a pullback from the mentioned levels.
Looking at the 4 hour chart of USDJPY, RSI is also coming closer to the 80 level. So, I think we should be looking for a sell opportunity in the short term. There is already a continuing divergence on the 4 hour chart. If the pair climbs higher towards the resistance zone, makes a stop and forms bearish candle pattern on the 1 hour chart, then we will enter a sell trade.
Initial target should be around the up-move trend line as plotted on the 4 hour chart shown above, and final target could be around the 100.80 level. Stop should be placed above the 104.20 level.
Reviewing Friday’s events and trades
On Friday, the US market was closed early and that’s why the liquidity dropped later in the day. Earlier in the European session, the German retail sales data was released, which registered a decline from -0.2% to -0.8%. However, the Euro zone’s CPI jumped from 0.7% to 0.9%. Overall, the US dollar traded lower against the major currencies. Moreover, the Aussie and Kiwi traded lower at the end of the week, and the Canadian dollar traded a touch lower after the Canada’s GDP release, which registered a growth rate of 0.7%, missing the expectations of 1.0%.
Fundamental Outlook for the day
There are a lot of fundamental events scheduled during the day. The manufacturing PMI data was released for the Euro zone in the European session. Later, in the NY session, we have US ISM manufacturing PMI data scheduled to be released. The Fed chairman Ben Bernanke will also be speaking later in the day. I expect a lot of volatility during his speech. Furthermore, in the next Asian session, Australia’s retail sales data and RBA interest rate decision are lined up, which can cause heavy movements for the Australian dollar.
This analysis is taken from today’s Daily Market Forecast, which also includes trade opportunities on: EURUSD, GBPUSD, EURGBP, USDCAD, NZDUSD, EURAUD, AUDNZD, GOLD and NASDAQ.
Get it HERE: Vladimir’s Markets Forecast
Have a green week friends. Happy trading!
