There is some key overhead resistance that will help define the bias.
What can we glean from a technical perspective in the USDJPY?
Taking a broad look at the price action on the weekly chart, key overhead resistance sticks out as we head into 2020.
That resistance is defined by the
- 200 week MA at 109.696
- 100 week MA at 109.591
- Topside trend line resistance at 109.56, and the
- 50% retracement at 109.491
The price action into the last 5 weeks of trading have found sellers against that area. The price has rotated lower over the first two days of this week. The USDJPY currently trades at 108.543 as a result of the selling this week.
Nevertheless, in 2020 that area will be a key barometer for both the bulls and the bears. Stay below, and the sellers/bears remain more in control. Move above, and we should see further upside momentum with the next closest targets at 110.00 and the 61.8% retracement at 110.684.
Taking a look at the daily chart, the price action over the last 2 months has been above and below its 200 day moving average at 108.672 price (green line in the chart below). The move higher stalled against the topside trend line (that was also resistance from the weekly chart of course). A move above that trend line would be needed to solicit more bullish momentum.
With the price currently below the 200 day moving average traders will be eying the lower 100 day moving average at 108.103. The price last traded below that 100 day moving average back on October 10. A move below that moving average would be more bearish and should solicit more selling pressure with the 38.2% retracement at 107.704 followed by the 50% retracement at 107.081 as the next closest downside targets.
Summary: The USDJPY heads into 2020 with strong overhead resistance on the weekly chart as a potential lid. Stay below and the bears remain more in control.
On the downside, if the sellers are to take more control, they would need to push below the 100 day moving average and stay below that key moving average.
We currently trade between those key extremes. As a result, the technicals are more neutral and waiting for the next shove. Be aware in 2020 of those levels.
