On October 20, USD/JPY weakened to 114.69 which is a yearly high for now. This price level was last seen on November 6, 2017. After touching this level, the pair started a technical correction and is now trading below the 21 SMA located at 114.24 and below the 6/8 murray (114.06).
The Japanese yen has always acted as a safe haven currency. It seems that now it is more attractive for investors to buy the yen as it has a lower price compared to when it was trading at 102.50 at the beginning of the year.
Investors have become cautious amid new concerns about a credit crunch in China's real estate sector. This news could increase demand for the yen in the coming days. A breakout of its uptrend could push the price lower to the 200 EMA located at 111.91.
Given that the yen is still trading within its uptrend channel, we believe that this correction could reach the bottom of the channel near 114.50. Around this level it will be a good opportunity to buy as the prevailing trend continues to be bullish.
We must still be cautious and wait for a sharp break below 113.21 (5/8) and a break of the uptrend channel before confirming that USD/JPY has reached its peak so that we can start opening aggressive bearish positions.
Our forecast in the short term is to sell at current price levels around 114.24. At the time of writing, the pair is trading at 113.99 with targets at 113.50. A bounce from the bottom of the bullish channel will give us the opportunity to buy with targets at 114.06 and up to 7/8 murray at 114.84.
Our outlook continues to be bullish for the USD/JPY pair as long as it remains above 111.90 where the 200 EMA is located. If the price approaches this area in the next few days and consolidates above it, it will be a good opportunity to buy.
The eagle indicator continues to give a bearish signal since October 14 when it touched the imminent correction level at 95 points. It is likely that the pair will make a correction in view of a decrease in the volume of long positions according to the 4-hour chart.
Support and Resistance Levels for October 21 - 22, 2021
Resistance (3) 114.84
Resistance (2) 114.59
Resistance (1) 114.33
Support (1) 113.97
Support (2) 113.70
Support (3) 113.35
A trading tip for USD/JPY for October 21 - 22, 2021
Sell below 114.24 or sell now at 114.00, with take profit at 113.70 and 113.50 (Bullish channel), stop loss above 114.59.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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