Technical Bias: Bullish
Key Takeaways:
- USDJPY leaves a classic bearish pin bar
- Japan’s machinery orders exceed expectations
- Rising trendline remains intact
The US Dollar (USD) extended upside movement against the Japanese Yen (JPY) on Wednesday, increasing the price of USDJPY to more than 120.40 following the release of Japan’s machinery orders data. The technical bias remains bullish due to a Higher High (HH) on the daily chart.
Technical Analysis
As of this writing, the pair is being traded around 121.40. A support may be seen near 121.00, the psychological number ahead of 120.84, the swing low of bullish pin bar on four-hour chart and then 120.03, the 38.2% fib level as demonstrated in the following chart.
On the upside, the pair is expected to face a hurdle near 122.00, the psychological number as well as swing high of the bearish pin bar which emerged yesterday. The bias will remain bullish as long as the lower trendline channel remains intact.
Machinery Orders
Machinery orders in Japan remained 1.9% in January as compared to 11.4% in the same month of the year before, a report revealed yesterday, up beating the average forecast of -1.0%. Generally speaking, higher machinery orders reading is considered positive for the economy thus a better than expected actual outcome spurred moderate selling pressure in the price of USDJPY.
Trade Idea
Considering the overall technical and fundamental outlook, selling the pair around the current levels appears to be a good strategy in short to medium term. The trade should however be stopped out on a daily closing above the 122.00 resistance area.
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