Forex Technical Analysis USD/JPY 2014-01-30

30 January, 2014

Good afternoon, dear traders. Today at 14:30 (GMT +0), we expect the publication of two key indicators for the U.S. economy: the adjusted GDP (Advanced GDP) and jobless claims (Unemployment Claims). The GDP will be estimated with adjustment for inflation and will have the greatest impact on investors, because it is quarterly GDP unlike weekly Unemployment Claims. The domestic consumption plays the greatest role in the GDP determination and therefore, decrease in this indicator may lead to weakening of the US Dollar. Both indicators are currently defined with negative forecast: -0.8 % and +5K for GDP and Unemployment Claims respectively. In this regard, we can expect the weakening of the U.S. currency that we will use choosing a trading position.

At the moment, the least mixed signals are coming from the USD/JPY currency pair. We can see that the currency pair price movement structure corresponds to the bearish sentiment on the upcoming news. In support of this point of view, we consider the following arguments :

1. The Parabolic SAR trend indicator is above the price and moves along the first Pivot resistance level. In addition, we note that it has crossed down the next historical resistance level that gives additional confidence in the likely downfall.
2.Price moves within the four-hours falling channel;
3.The H4 uptrend of the RSI(14) oscillator is limited by a lateral triangle, indicating the correction ending - the price is ready to continue its downward movement;
All the above arguments suggest that the most likely scenario is a fall in the price of the USD/JPY on anticipation of the GDP and Unemployment Claims at 14:30 (GMT +0). It is recommended to place a pending order to buy below the previous low (101.838). The nearest target corresponds to 161.8 % Fibonacci level, but we put it a little bit higher, at historic lows 100.957. Risks are defined by the closest peak, which coincides with the Pivot resistance at 103.443 and thus it gives additional confidence about the importance of this level. It is recommended to delete the position or to switch it into breakeven condition 15 minutes prior to the publication.


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