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The Dollar/Yen is trading slightly lower early Wednesday. The price action is being fueled by profit-taking and position-squaring ahead of the Fed’s interest rate decision, monetary policy statement and press conference on Wednesday. The Fed is widely expected to raise its benchmark interest rate 25 basis points. However, traders will be looking at the statement for clues as to the timing and pace of future rate hikes.
At 0255 GMT, the USD/JPY is trading 112.917, down 0.055 or -0.05%.
The USD/JPY could weaken if the Fed comes across as dovish. A hawkish Fed is likely to trigger a surge to the upside into a series of potential resistance levels.
Daily Technical Analysis
The main trend is up according to the daily swing chart. The trend is safe at this time, but the Forex pair begins the session in the window of time for a potentially bearish closing price reversal top. So watch for a higher-high, lower-close chart pattern.
The minor trend is also up. A trade through 112.410 will change the minor trend to down. This will also signal a shift in momentum to down.
The nearest retracement zone support comes in at 111.896 to 111.490.
Daily Technical Forecast
Based on the early price action, the direction of the USD/JPY the rest of the session is likely to be determined by trader reaction to yesterday’s close at 112.972.
A sustained move over 112.972 will indicate the presence of buyers. If this move can generate enough upside momentum then look for buyers to make a play for a pair of tops at 113.21 and 113.381.
If 113.381 is taken out with conviction, the buying could even extend into 113.631 and 113.745.
A sustained move under 112.972 will signal the presence of sellers. Since we’ve already had a higher-high, this will also signal the start of a closing price reversal top.
The first minor target is a bottom at 112.410. Taking out this level will signal a shift in momentum to down. Additional downside targets are another minor bottom at 112.048 and an uptrending Gann angle at 112.004.
This article was originally posted on FX Empire