Daily Analysis: Looking forward to sell a break in USDJPY

USDJPY traded higher in the last week, and created a new monthly high. The pair also created 20 candles ride on the daily chart, as can be seen in the chart shown below. Fundamentally, some improvements are noted for the Japan in the short term. I think considering the pair is overbought we can look for short term sell opportunities.

There is an important up-move trend line as plotted on the 4 hour chart shown below. The current support for the pair is around the 102.80 level. If the pair manages to break this trend line and support, retests the broken trend line and holds below it, then we will enter into a sell trade. This scenario is highlighted in the chart shown below. Remember, we want the pair to hold below the trend line to jump into a trade.

Initial target should be around the channel duplication level of 101.90/85, as shown in the chart below, and final target could be around the opposite band of Bollinger on the daily chart. Stop should be placed above the broken trend line and support.

Reviewing Friday’s events and trades
Friday was a less volatile day. During the European session, the Swiss PPI data was released, which came better than expected, and helped the CHF to gain some ground. Later in the NY session, the US PPI data was released. The outcome was mixed, as the US PPI (MoM) registered a reading of -0.1% as expected, and PPI (YoY) missed the expectations of 0.8%. Similarly, core PPI (MoM) registered a gain of 0.1%, and core PPI (YoY) missed the expectations of a 1.4% gain. The US dollar traded touch lower after the data release.

Fundamental Outlook for the day
Today, we have manufacturing and services PMI data scheduled for the Euro zone in the European session. In the US session, the Nonfarm productivity data, the NY Empire State Manufacturing Index, Treasury International Capital (TIC) Net Long-Term Transactions data and the US industrial production data will be released. The market is expecting a rise of 0.5% in production, and if the outcome is positive, then the US dollar may gain in the coming session. Later in the Asian session, RBA monetary policy meeting minutes will be released, which can cause some movements for the Australian dollar.

This analysis is taken from today’s Daily Market Forecast, which also includes trade opportunities on: GBPUSD, EURGBP, USDCAD and EURCHF.
Get it HERE: Vladimir’s Markets Forecast

I wish everyone a Green week. Happy trading friends!