The Dollar Yen continue to show bullish tendencies in this clear uptrend. On the left is the H$ and the right is the Daily chart. Starting with the daily chart, we can see that the pair closed with a Bullish engulfing candle and broke above the channel and the 15ema. This bullish set up can signal more bullish moves in the pair over the next few days. However, do take note that we are trading in December which is synonymous with thin markets and volatile moves. As such, the pair could also consolidate sideways from here.
On the 4H, the pair is seen trading above the 15 and 33 ema. This usually signals to us to take long trades and which is apt as we are in an up trend. The pair is stalling at the 50% Fibonacci level on the 4H. I believe that the 38.2 Fibonacci level on the 4H could act as support if the pair decides to test support levels on the downside.
The fresh daily highs we saw yesterday happened during the speech by Yellen who mentioned that the Fed should remain patient when it comes to the relaxing of US monetary policy. The announcement also tells traders that Yellen is not so much in a hurry to take any drastic actions and will be looking at future US data closely before making any decisions on monetary policy. In spite of the “dovish” statements by Yellen, the US dollar strengthened and in my opinion could be capital that has been staying on the margins before coming in after the passing of this “event risk”.
On the upside and looking at the daily time frame, we are looking at Fibonacci extensions to give us a clue to where USDJPY might proceed. The 1.272 level is at 123.54 and the 1.618 level is at 125.7. Before those levels can be reached, we need to see the pair clear the last high at 121.83.
On the downside, and still basing the analysis on the daily time frame, support is seen at the 38.2% Fibonacci level which is in light maroon colour and taking the swing low at 105.271 and the swing high at 121.822. A break below that level will see the pair heading towards a Fibonacci cluster and potential support area around 113.547 to 113.891.
I hope the Forex analysis on the dollar yen have given you a clearer picture of how to trade this pair.
To your trading success!