Forex Technical Analysis USD/JPY 2014-01-28

28 January, 2014

Good afternoon, dear traders. Congratulations to those who took profit yesterday on the basis of analytical forecast for the USD/CAD. As it was expected, the Canadian Dollar broke through the support at 1.10516 on New Home Sales market expectations – the forecasted figure is below the previous one. The author's position: short at 1.10490, closure at 1.10207, profit (250 points).

Today at 14:30 (GMT +0) we expect the U.S. Bureau of Statistics to release the U.S. economy key indicator – changes in the basic durable goods orders (Core Durable Goods Orders m/m). This indicator characterizes the stability of the domestic demand in the U.S. economy, as it includes the secondary demand products. However, the core index excludes the volatile transportation component. At the moment, the growth is expected to reduce from 1.2 % in the previous month to 0.7 % (predicted value). If the estimate is confirmed, then we should expect a weaker Dollar in the foreign exchange market. This is especially true for the second half of the day as the market does not expect surprises from the statistics. As for the consumer confidence index (CB Consumer Confidence), which comes out at 14:30 (GMT +0), the predicted value is equal to the previous - 78.1 %. We will try to take profit on the expectation of lowering Core Durable Goods Orders: “buy rumors, sell the facts “.

The least controversial technical analysis signals are coming from the USD/JPY currency pair on the chart H4. We believe that the price movement structure corresponds to the bearish sentiment. In order to confirm this point of view, we consider the following arguments:

1. The ParabolicSAR is above the price and moves along the upper side of the triangle ;
2. The RSI(14) moves within a four- day falling trend;
3 .The price is kept being ruled by the daily bearish trend;
All the above arguments suggest that the most likely scenario is a fall in the price of the USD/JPY on the expectations of the Core Durable Goods Orders publication. We recommend placing a pending order to buy below the previous low at 102.194. Despite the fact that the target is determined by the system of Fibonacci levels, we will be careful and set a Take profit slightly higher - at the penultimate minimum (101.900). This also corresponds to the first level of Pivot resistance. It is recommended to keep the position till the publication of the news and to move the Stop loss according to the ParabolicSAR. The position can be closed or put into the breakeven condition 15 minutes prior to the publication.


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