USD/JPY Testing Trendline Around 103.74

The United States dollar versus the Japanese yen currency pair seems to be having some difficult times when it comes to deciding upon the main direction.

Long-term perspective
Starting from the 108.16 high, after the intermediary level of 108.05 was falsely pierced, the fall managed to extend until the 102.59 low.
The same high of 108.16 is the origin point of a descending trendline that limits the upper movement of the falling trend that oscillates under it.
Since its beginning, the falling trend had only two attempts to pierce the trendline, the first highlighted by the 105.67 high and the second by 104.39, respectively.
The first one ended with the return of the price under the firm area of 105.09, an event that, catalyzing the validation of a double resistance area, aided the continuation of the trend.
The second one, which happens to be closer to the present time, seems to have some struggles continuing to ebb.
So, on the bullish side, the 104.39 is seen as a false piercing, which gives credit to the bears. On the bearish side, the false piercing naturally continues with the fall.
However, as the fall is not materializing, a bullish movement may be expected. This scenario begins to add up if we put into the picture the oscillations that, even if they caused a retracement from the trendline, unfolded above the 103.74 level.
In other words, the bearish desire to validate the trendline once more may have backfired, as, to accomplish this, they had to bring the price above the 103.74 supportive area.
The scenario is similar to the previous one (see the 105.67 high), as the price was put back above the critical support area of 105.09.
However, this time the bulls seem to be less flexible, taking the chance to make a trend change.
So, if 103.74 remains support, the price may pierce the trendline and head for 105.09, which would be the main bullish objective. Along this path, the 104.39 and 104.57 highs are possible profit booking areas.
On the flip side, if 103.74 is validated as resistance, 103.15 may be paid a visit.

Short-term perspective
From the 102.59 low, the price appreciated until it got above the 103.71 zone and later almost touched the 104.44 resistance.
As long as the price is contained within the area defined by the two levels, range trading may be seen.
Usually, as such developments are continuation patterns, and as this one is preceded by an appreciation, the resistance is expected to give way.
Therefore, if 104.44 becomes support, then 105.27 — not highlighted on the chart — is the next bullish area of interest.

Levels to keep an eye on:

D1: 103.74 105.09 103.15
H4: 102.59 103.71 105.27

If you have any questions, comments, or opinions regarding the US Dollar, feel free to post them using the commentary form below.

Original from: www.earnforex.com