USDJPY Forex Market Correction Setup – Nov 21, 2014

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USDJPY Forex Market Correction - Nov 21, 2014

USDJPY Forex Market Correction - Nov 21, 2014

USDJPY has been on a steady climb but it appears to be retreating from its latest rally. Price peaked close to the 119.00 handle then showed signs of retracement to the 116.50-117.00 levels.

The Fibonacci tool on the latest swing high and low shows that the 61.8% level lines up with the rising trend line on the 1-hour time frame. This is also close to the 200 simple moving average, which could hold as a dynamic support zone.

USDJPY Forex Forecast

Stochastic is still pointing down, which means that there’s enough selling momentum for a deeper retracement. However, the 50% Fib might also hold as support since it lines up with the 100 SMA, also a dynamic inflection point that has held so far.

There are no major reports out of Japan and the US today, which might mean that the USDJPY trend could carry on. Profit-taking could take place before the trading week comes to a close though before the overall trend resumes next week.

Bear in mind that the Japanese economy slumped in recession and the BOJ committed to their easing plan while the US saw improved data and the Fed is on track to tighten next year. With that, the path of least resistance for USDJPY is to the upside, as traders predict that the pair might reach 120.00 before the end of this year.

A sharp correction along with profit-taking might lead to a test of 116.50 support around the rising trend line and 61.8% Fib, with a breakdown likely to indicate that a much larger correction is in the works. Longer-term charts confirm that the uptrend is still intact and likely to resume sooner or later.

There’s a strong chance that the 117.00 level might already hold as strong short-term support and push prices back up to the 119.00 area before the week comes to a close.

To contact the reporter of the story: Samuel Rae at samuel@forexminute.com

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Samuel Rae is an active retail trader across a variety of assets, including currencies, stocks and commodities and the author of Diary of a Currency Trader (Harriman House). His personal strategy focuses primarily on classical technical charting patterns with a fundamentally supportive bias, combined with a strict, risk management-driven approach to entries and exits. He is an Economics graduate from Manchester University, UK.