Yen has broken down and consolidated below support level

February 10, 2016

Technical data of the currency pair:

Previous closing: 115.13;
Daily range: 114.26-115.26;
Opening: 115.13;
52- week range: 114.24-125.86;
Annual revenue: -3.39%;
Change in % for the previous day: -0.41; 

Analytical review:

Over the past 2 weeks the Yen has significantly strengthened its positions against the USD due to the increasing demand for the safe-haven currency. Mixed macro-economic data on the US economy has decreased a chance that the US Fed will tighten monetary policy. Further rise in the Yen was boosted by significant decline of Nikkei index due to crisis in the global economy. Concern about stability of the banking system of EU provoked sales of shares of the financial sector in the European and American markets, which contributed to the rise in the Yen. “Commitments of Traders” indicated the increase in demand for the currency. Large speculators have reduced short positions by 19676 contacts.. Long positions have increased by 6754 contracts.

Summary:

In the past 2 weeks the Yen has grown in price by 650 points against the USD. Poor US statistics, decline in the Asian stock markets, problems in the EU economy are the factors, which increase demand for the Yen. According to “COT”, large speculators started to show interest in Japanese currency.
We expect that in the near future the Yen will grow against the USD. Short positions on the pair USD/JPY are recommended.

Trading tips for the currency pair USD/JPY

Long-term trading: the Yen has broken down and consolidated below support level of the reversal pattern “Head and shoulders” (weekly chart). After testing the levels of 116.00-117.35 and in case of confirmation (for example, a pattern Price Action), we recommend to open short positions. Stop order can be placed slightly above the signal line. For this position we recommend “multi-trade”. Take profit should be placed in parts at the levels of 114.00, 112.50 è 110.50.

Short-term trading: currently, the currency is traded between the local support and resistance levels of 114.40-115.40. After breakdown and testing of these levels, we recommend to enter the market. The positions can be opened near the signal line and close to support/resistance levels. Stop order can be placed slightly above the signal line. For this position we recommend “multi-trade”. Take profit should be placed in parts at the levels of 50%, 30% and 20%.

Publication source
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