USD/JPY Looks Set To Test The Long Term Channel Support

The US Dollar (USD) again fell broadly against the Japanese Yen (JPY) on Thursday and closed in the negative territory, showing signs of weakness in the price action. The USD/JPY is expected to test the long term channel support in near future before resuming the upside rallies.

Technical Analysis

As of this writing, the pair is being traded near 102.33. A hurdle may be seen around 102.90, the 100 Simple Moving Average (SMA) ahead of 103.32 that is the 23.6% fib level and then the channel resistance which is currently sitting in near 103.71. A break and daily closing above the channel resistance will push the pair into stronger bullish momentum, opening doors for an upside rally above the 105.00 handle.

On the downside, the pair is likely to find support near 102.00, the 38% fib level and psychological level and then the channel support which is sitting in around 101.71. A daily closing below the trendline support will validate a deeper correction towards the 100.00 support area.

Japan Retail Sales

 On Sunday (April 27), Japan’s Ministry of Economy, Trade and Industry will release the annual retail sales balance. According to the median projection of different economists, the retail sales jumped by 5.5% in March as compared to 3.6% in the same month of the year before, better than expected actual outcome will be seen as bearish for USD/JPY and vice versa.

Trade Idea

The market sentiment for USD/JPY is still very bullish due to Higher Low (HL) in the previous move, so buying on dips (around the channel support) will be a good strategy, the stop should be placed just below the trendline support while the target can be around the channel resistance.