Yen Weakness Looks Set to Continue After USD/JPY Records Strong This autumn’21
The Japanese Yen noticed important weak spot towards the US Dollar in 2021. USD/JPY gained in all however three months final yr, with the forex pair hitting the best stage since January 2017 in November. US Dollar bulls managed the narrative in This autumn 2021, which places costs on a robust footing to rise additional within the new yr.
USD/JPY made a number of key technical victories final yr, together with a climb above a descending trendline from the early 2017 swing excessive. That trendline capped upside actions within the pair for the previous yr till March 2021, when costs pierced above the extent. The 200-week Simple Moving Average provided confluent resistance, however the ranges turned to help, and costs subsequently broke increased. That power noticed a clear break above the psychologically imposing 110 deal with.
USD/JPY Monthly Chart
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USD/JPY Downside Appears Limited With Robust Support
The weekly chart highlights attainable ranges of resistance and help that will seem in Q1. The 61.8% Fibonacci retracement stage from the 2015 excessive to 2016 low has already confirmed to be a sticky level in Nov. A break above that, nevertheless, places give attention to the late 2016 swing excessive at 118.665. Shortly above that stage lies the 78.6% Fib, with a full retracement to the 2015 multi-year excessive serving as the following doubtless resistance level.
Alternatively, a transfer decrease has a number of potential help ranges. The rising 100-day SMA presents the primary line of defence towards a bearish transfer, with the shifting common monitoring shortly beneath value ranges in December. The 200-day SMA sits in an almost confluent place alongside the 110 psychological deal with and the 38.2% Fibonacci retreat. The 2017 trendline comes into play slightly below these ranges.
One level of concern is a unfavorable divergence between costs and the Relative Strength Index (RSI), highlighted in crimson within the chart beneath. The divergence means that upside vitality could also be waning. USD/JPY bulls will wish to see RSI break above the extent round 75.54 the following time costs rally increased to interrupt the unfavorable divergence.
USD/JPY Weekly Chart
Chart created with TradingView
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