USD/JPY Technical Analysis

In the 4 hour timeframe, we have seen a resistance level of 78 which, if broken, will give a sell signal. This may allow the price to go as low as 77.66 experienced earlier on the 1^st of June, and 77.50 in extension. Therefore, the bearish channel is reinforced and a bearish outlook shall remain until a breakout of 78.80 is experienced.

The hourly timeframe shows that a narrower bearish channel has already been broken. Earlier, a false breakout was experienced followed by a successful one, which seems to be continuing at the moment. This is being resisted at 78.15. It is important to notice that we could see a triple bottom soon; there have been two bottoms experienced already.  

If this is experienced and a breakout on the upper resistant levels is experienced, we could see a significant reversal.

Stochastics for the 4 hour chart are in a downward trend, currently hovering at 50.75. MACD seems to be bullish but is giving a lot of false signals and is roughly horizontal.

This shows resistance and a slowdown of volatility for the pair. RSI seems to be roughly horizontal as well.

In the hourly view, MACD is in a bearish mode, although this has been continuing for a few hours and might come to a halt by the end of its wave. Stochastics already give a signal towards a reversal, and so does RSI, which means that the MACD might show a bullish signal soon, and that the oscillations currently occurring in the price might continue.

Fundamental: Tonight there will be an announcement from the Bank of Japan regarding interest rates. Although some economists do not expect an extension of the acquisition programme until the next interest-rate meeting, there is a good chance that it might happen at this meeting. This will affect JPY trading for the next day.

There is a strong chance that the USD/JPY pair will strengthen due to the turmoil experienced in Japan’s political environment. The current government may face a No Confidence vote. The opposition party, which may take control, advocates a higher inflation rate target of 2.0%, which increases the expectations of an aggressive Bank of Japan easing.