Nikkei's Breakout Puts USD/JPY On The Radar

Share On Facebook

Renewed trade optimism and strong earnings from the US on Friday has seen Asia shares break broadly higher today, with the Nikkei 225 trading at its highest level since early December. We can see on the Nikkei 225 futures market that the trend structure is increasingly bullish, and today’s range expansion shows the index accelerating away from its 200-day average. Ultimately, the trend remains bullish above the 21,540 low but over the near-term we’d like to see prices hold above the 21,876-21,970 highs, before targeting the December high around 22,700. With the Nikkei having broken a cycle high, we’re closely watching to see if USD/JPY follows suit.

On the daily chart we can see that USD/JPY has stalled near the March high and is pondering a break higher. A morning star reversal pattern helped the pair bounce back above the 200-day eMA and has seemingly formed the ‘right shoulder’ (RS) of a potential inverted head and shoulders pattern. If successful, the pattern projects an initial target just above 114. Furthermore, the short-term averages are fanning out to show a pick-up of bullish momentum. Whilst Friday’s could be used to confirm the inverted head and shoulders pattern, we’d prefer to use a break above December’s low (112.24) to confirm a breakout which bring 113 (round number) and the 113.70 highs into focus as potential, bullish targets.

As noted in this week’s COT report, JPY traders are their most bearish on the yen since late December, with short interesting continuing to pick up whilst long interest trend lower. Yen futures have remained elevated, so perhaps its time to close the gap and break lower (which would be bullish for USD/JPY) and follow the Nekkei and AUD/JPY’s bullish break.

 

City Index: Spread Betting, CFD and Forex Trading on 12,000+ global markets including Indices, Shares, Forex and Bitcoin. Click here to find out more.

 

CLICK HERE TO REGISTER FOR FREE ON ADVFN, the world's leading stocks and shares information website, provides the private investor with all the latest high-tech trading tools and includes live price data streaming, stock quotes and the option to access 'Level 2' data on all of the world's key exchanges (LSE, NYSE, NASDAQ, Euronext etc).

This area of the ADVFN.com site is for independent financial commentary. These blogs are provided by independent authors via a common carrier platform and do not represent the opinions of ADVFN Plc. ADVFN Plc does not monitor, approve, endorse or exert editorial control over these articles and does not therefore accept responsibility for or make any warranties in connection with or recommend that you or any third party rely on such information. The information available at ADVFN.com is for your general information and use and is not intended to address your particular requirements. In particular, the information does not constitute any form of advice or recommendation by ADVFN.COM and is not intended to be relied upon by users in making (or refraining from making) any investment decisions. Authors may or may not have positions in stocks that they are discussing but it should be considered very likely that their opinions are aligned with their trading and that they hold positions in companies, forex, commodities and other instruments they discuss.

Leave A Reply

 
Do you want to write for our Newspaper? Get in touch: newspaper@advfn.com

By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions

P: V: D:20190722 22:24:33