USD/JPY – Further upside is favored

June 8, 2014 in Chart Alert

This USD/JPY update follows the previous post titled “USD/JPY Should See Some More Gains But Caution Needed“. The previous post had indicated gains towards 102.75 resistance. The currency pair had moved that way and touched 102.79 before retreating back and then jumping again. Let’s look into the charts to see what they indicate. We will also touch upon the fundamentals a bit.

USD/JPY and 200-day moving average

USDJPY daily chart with 200 day moving average - June 8 2014

The pair had broken over the 200-day moving average resistance but could not sustain. Last Friday’s resistance came just below that. However when we are talking about this resistance which may possibly sustain, let’s take a look on the significance of the recent supports.

USD/JPY chart with daily Ichimoku cloud - June 8 2014

The above chart shows that though the effort to break above the daily Ichimoku cloud’s upper edge was practically failed, the pair found a strong support over the lower edge of the cloud. This facts indicate that USD/JPY’s fight to gain further has not ended as yet.

USD/JPY daily chart with exponential moving averages - June 8 2014. The chart indicates positive outlook.

The support also came at 55-day EMA as the above chart is indicating. In-fact the 55-day EMA is also supported by 22-day EMA currently, as both are at the same level. The weekly closing was well over the weekly exponential moving average i.e. the 5-day EMA.

USD/JPY and previous resistances - daily chart - June 8 2014. Previous resistances seem to have turned into support.

The recent support at 102.11 also suggests that the previous resistance zone might have turned into support as the above 8-hourly chart indicates. In fact we prefer 4-hourly chart but this is to cover more price-action.

What else is in the favor of expecting further gains?

Daily MACD remains above the signal line and with quite convincing bullish gap.

USDJPY with MACD - June 8 2014. The MACD remains bullish.

Last week’s candle’s body was the largest during past 7 weeks. The price-action had also broken over the short-term resistance line and remains well over it.

USDJPY weekly chart with trend lines - June 8 2014

A look on the fundamentals and what to expect

Last month i.e. April 2014’s non-farm payrolls were revised from 288K to 282K. The market consensus for May 2014’s NFP were for 218K. The drop of USD/JPY had already factored that drop in the payrolls. The final release came out slightly weaker at 217K. However, on the other side the markets were expecting the unemployment rate in the U.S. to rise from 6.3% to 6.4%. The unemployment rate did not rise and remained same. The overall effect goes in the favor of the U.S. dollar. Please note that you can find the up to date revised NFP data at the above indicated post as well as at “Up-to-date non-farm payroll data since 1939

Coming Monday Asian morning session will see the GDP data releases from Japan. The quarter over quarter GDP for Q1 is expected to see a strong jump to 1.4% from the previous 0.2%. The annualized GDP figures are expected to rise from 0.3% to 5.6%. The expected figures for both these economic releases are quite optimistic. If the results come even slightly disappointing then the USD/JPY should jump quite strongly towards 103.01 resistance first and then possibly towards 104.00.

On the other side any break below 102.11 will start making the above outlook neutral. However in such case also we will expect a strong support at 101.80/101.82. This zone represents the support of the Kijun-line of daily Ichimoku cloud. If that support fails then the focus will turn back towards downside.

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