USD/JPY: Reversal Higher Cannot Hide Mid-Term Bearish Trend

Robert Petrucci

A slight reversal higher in early USD/JPY trading this morning has been demonstrated, but short-term speculators should still consider the larger trend.

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The USD/JPY is trading near 109.500 as of this writing, having climbed from a low of nearly 109.100 seen earlier in the day. The ability of the USD/JPY to climb off of the lows which retested depths seen on the 15th of September and 16th of August may have made some speculators content who wagered on upside reversals, but the mid-term trend of the Forex pair should be kept in mind.

On the 11th of August, the USD/JPY was trading near a high of 110.800 and has incrementally seen resistance levels lower the past six weeks. This has not been accomplished in an easy fashion and certainly reversals have been part of the trading landscape, but the USD/JPY continues to demonstrate a lack of upward thrust which has significantly challenged higher levels. If current short-term resistance levels prove durable near the 109.720 to 109.750 levels, this could be a signal that additional downside momentum will be displayed.

Technically, the USD/JPY has produced a bearish trend which should be given consideration and the addition of rather fragile investment sentiment short term adds a speculative ingredient which may intrigue traders. The ability of the USD/JPY to trend in a bearish fashion when risk-averse trading behavioral sentiment increases in Asia has a history of proving itself.

If the USD/JPY continues to hover below current resistance levels, speculators may be inclined to seek more bearish activity within the Forex pair short term. Support ratios near the 109.500 to 109.450 levels should be monitored closely. If these marks are suddenly put to the test and begin to prove vulnerable it could signal that a move towards the 109.30 to 109.200 junctures may potentially ignite rapidly.

Transactional value within the USD/JPY is huge and there is plenty of transparency for speculators to examine. The short term is likely to produce rather choppy results until global market conditions calm down, but the question that should be asked by speculators with an interest in behavioral sentiment is when tranquility will be restored.

While there have not been volatile moves in the USD/JPY, traders should continue to be on the lookout for the potential of sudden gyrations. Risk management is strongly advised and the use of stop losses and take profits to secure trades should be a priority. Selling the USD/JPY on slight reversals higher which remain under current resistance levels, and looking for reversals lower may prove worthwhile wagers for traders.

USD/JPY Short-Term Outlook

Current Resistance: 109.750

Current Support: 109.450

High Target: 109.930

Low Target: 109.150

USD/JPY

Robert Petrucci
Robert Petrucci has worked in the Forex, commodity, and financial profession since 1993. Important aspects of his work involve risk analysis and advisory services. As an advisor in a Family Office he maintains a conservative approach for wealth management and investments. Robert also works in private finance with investors and companies delivering financial and management services.

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