JPY : Technical Analysis
(Tue, 8 Dec 2020). The Japanese Yen looks set to gain ground against the US Dollar and British Pound in the coming days. However, the Euro may extend its run higher against the haven-associated currency, as buyers eye the yearly high set in September. Here are the key levels to watch for EUR/JPY, GBP/JPY and USD/JPY rates.
EUR/JPY DAILY CHART – BULL FLAG IN PLAY
The EUR/JPY exchange rate seems poised to extend its topside surge to multi-month highs, after slicing through Descending Channel resistance and the psychologically imposing 125.00 mark. With prices carving out a Bull Flag continuation pattern and the RSI eyeing a push into overbought territory, the path of least resistance looks to favour the upside.
A daily close above the December 4 high (126.68) is likely required to validate the bullish continuation pattern and carve a path for EUR/JPY to challenge the 2019 high (127.50). The Bull Flag’s implied measured move suggesting price could climb an additional 2% from current levels to test key psychological resistance at 128.00.
Conversely, slipping back below the December 2 low (125.77) could neutralize near-term buying pressure and ignite a pullback towards the October high (125.08).
GBP/JPY DAILY CHART – CONFLUENT RESISTANCE CAPPING UPSIDE
GBP/JPY rates could reverse lower in the coming days, after buyers failed to hurdle confluent resistance at the Pitchfork median line and November high (140.31). Significant bearish RSI divergence, in tandem with a bearish MACD crossover, is indicative of fading bullish momentum and may ultimately trigger further selling if prices slide back below the 21-day moving average (138.69).
Clearing that would likely bring support at the trend-defining 50-DMA and August low (137.74) into focus, with a daily close below opening the door for prices to challenge psychological support at 136.00. Alternatively, a retest of the monthly high (139.44) could be on the cards if the 21-DMA successfully stifles selling pressure.
USD/JPY DAILY CHART – SCHIFF PITCHFORK GUIDING PRICE LOWER
USD/JPY looks set to extend its grind lower as prices continue tracking within the confines of a descending Schiff Pitchfork. With price travelling firmly below all four moving averages, and both the RSI and MACD positioned firmly below their respective neutral midpoints, the path of least resistance seems lower.
Breaching the monthly low (104.22) would probably generate a push to challenge the November low (103.44), with a daily close below carving a path for price to probe the March 10 low (102.00).
On the other hand, USD/JPY could rebound higher if support at the monthly low remains intact, with a daily close back above the 21-DMA (104.28) needed to bring confluent resistance at the Pitchfork parallel and 100-DMA (105.27) into the crosshairs.
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