06.01.202111:24 Forex Analysis & Reviews: Analysis and trading recommendations for USD/JPY on January 6, 2021

The dollar/yen pair has not been sorted out for a long time and this gap will be filled today. To complete the technical picture, let's start with the weekly timeframe.

Weekly

In the very specific last week, the USD/JPY currency pair showed a decline, however, the strong support level of 103.18 did not submit to the bears again. Attempts to break through this mark ended only with its puncture, and the final closing price of the previous weekly trading was higher - at the level of 103.26. The first week of the new year began with a small price gap down, which was almost immediately closed, after which the dollar/yen continued to move in a southerly direction. This currency pair is dominated by bearish sentiment, which is primarily due to the weakening of the US dollar across the entire spectrum of the foreign exchange market. At the time of writing, the USD/JPY currency pair is already trading below the support of 103.18 and the level of 103.00, near 102.80. If the bearish pressure continues and the current week ends at 103.00, further downward prospects for this instrument will become even more obvious. In this case, the pair risks falling at 102.00, and even lower targets are in the area of 101.20, where the minimum trading values of March last year were shown. The change of bearish sentiment to bullish will occur only if the quote returns above the red line of the Tenkan Ichimoku indicator, which is now located at 104.14. It is characteristic that if earlier the US dollar was considered by market participants as a safe asset, due to the rampant COVID-19 pandemic, then recently such a trend is no longer visible. It can be seen that investors played all the negativity associated with the coronavirus infection, and even the new "British strain" COVID-19 did not help the dollar.

Daily

On the daily chart, after the appearance of a doji candlestick with a very significant lower shadow for January 4, one could assume that the pair would turn around and begin to strengthen, but yesterday's trading buried hopes of players for an increase in the rate, whose positions are too weak at the moment. However, in today's trading, the pair found support at a strong technical level of 102.60 and shows an upward trend. If a reversal bullish candlestick analysis pattern appears on the daily chart at the end of today's trading, we can expect further rate adjustments. We are not talking about changing the downward trend yet. In my opinion, for this purpose, the corresponding candlestick pattern should be formed on the weekly chart. So, the main trading recommendation for USD/JPY is sales, which are best opened after corrective pullbacks upward. First, the price for opening short positions will be more favorable, and secondly, the stop loss can be hidden higher and more reliably to protect the sale transaction. Do not forget about Friday's data on the US labor market, which can make significant changes and affect the results of weekly trading. Let me remind you once again that the USD/JPY currency pair is probably the most responsive to important statistics from overseas. The technically sound area for opening sales, at the moment, looks like 103.00-103.30. More aggressive sales can be tried from 102.90.