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Hello, dear traders!
Today, I am going to analyze the dollar/yen pair for you. Although a new trading week has begun, I'd like to analyze the pair's movement since last Friday.
Weekly chart
The USD/JPY pair kept scoring gains as I had expected. However, despite the continuing uptrend, bulls encountered strong resistance at 115.54 and failed to break through the barrier. This fact is confirmed by a very long upper shadow of the latest highlighted candlestick. In addition, the price settled precisely at the level of 115.54 at the close of the previous trading week (January 3-7). If we take into account that the quote grew to 116.37 last week but failed to consolidate there and closed at 115.55, we can draw a conclusion that it was an unsuccessful week for USD/JPY bulls.
Since the beginning of the current trading week, the price has been retracing down to the important historic, technical, and psychological level of 115.00. The quote has encountered support in this area and has somewhat recovered. At the moment of writing, the dollar/yen pair is trading around 115.34. At the same time, the quote's further movement remains vague. Yesterday's uptrend could extend if the price closes above the high of 116.37, and it is not an easy task at the moment. To stop the uptrend, bears should close below 115.00 at the end of this week. Meanwhile, consolidation below the red Tenkan Sen (114.46) will serve as the confirmation of the end of the uptrend.
Daily chart
According to the D1 chart, the quote reversed and went down after the formation of the highlighted candlestick on January 5. This candlestick is nothing more than the hanging man reversal pattern. Unfortunately, it appeared below the previous large bullish candlestick (green). Anyway, the market turned bearish. The quote fell below the red Tenkan Sen. In case the price rises to this line, it may encounter strong resistance there and reverse again.
So, if you are looking for options to sell the dollar/yen pair, it is the Tenkan Sen (115.6) on the D1 chart. Meanwhile, traders could consider opening long positions at the most favorable prices after a short-term drop to 114.80. The blue Kijun Sen is located there, which is able to provide solid support for the pair and resume its growth. These are my trading recommendations based on the current technical analysis of the two charts. At this point, it is hard to determine exactly whether it is a reversal or a correction. Perhaps I will once again analyze the dollar/yen pair this week to see where the price will be heading.
Best of luck!
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