USD/JPY Technicals – 97.0 Resistance Key for Stronger Bullish Revival

Hourly Chart


USD/JPY saw some initial sell-off post release of Q2 GDP data, sending price below 96.0 as the weaker than expected GDP growth spurred concerns that Abenomics may be over-hyped, resulting in Yen strengthening on safe haven flow, together with speculators buying up Yen due to doubts that BOJ will be able to “get the job done”.

Nonetheless, USD/JPY remains nicely bidded below 96.0, with Japanese importers buying up USD cheaply in order to hedge their future USD costs. As of writing, there are reports that major Stop Orders for short positions at 96.5 has been taken out, with more lying around 97.0+ and 97.2+. Bear in mind that these are orders of huge institutions, but it seems that retail flows are not much different, as evident via OANDA’s OrderBook which shows a larger concentration of buy orders around 97.0. However, OANDA’s OrderBook also show a larger amount of sell orders just under 97.0, suggesting that bulls will not have an easy time to hit above current levels.

Looking from technical point of view, it seems that the retail traders are looking at the resistance level around 96.8 – 97.0, which has been keeping bulls at bay since 8th Aug. Stochastic readings show that current price is Overbought, and even though readings are still pointing higher, a bearish cycle seems possible moving forward especially given the overhead resistance. If 97.0 is indeed broken, we may see quick acceleration towards 98.0 as the bulk of traders shorting just below 97.0 will be caught out, adding fuel upwards. On the other hand, should 96.8 hold out, 96.0 will reopen as a viable bearish target with 96.5 providing some support in the interim.

More Links:
Gold Technicals – Gaping Higher on Bullish COT Numbers
NZD/USD Technicals – Short Term Uptrend Intact Despite Early Week Minor Dip
WTI Crude – 106.0 Resistance Holding With 105.0 Eyed

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Mingze Wu

Mingze Wu

Currency Analyst at Market Pulse
Based in Singapore, Mingze Wu focuses on trading strategies and technical and fundamental analysis of major currency pairs. He has extensive trading experience across different asset classes and is well-versed in global market fundamentals. In addition to contributing articles to MarketPulseFX, Mingze centers on forex and macro-economic trends impacting the Asia Pacific region.
Mingze Wu