After last week clear gains correction American dollar to Japanese yen (USD/JPY) returned to the upward momentum and since day opening defeated 25pps from the support 103.70/60. The latter kept correction down, till the yesterday high 103.90, just below resistance 104.00. Downward trend line goes there, designating us above-mentioned correction movement. Probably, at this point it comes to determining whether the bulls will push price higher again, e.g. near last high 104.25 or whether the bears manage to reverse today’s growth and even deepen the correction.
Arguments for growth scenario: general appetite for American securities, the boom in the stock market and good data from the US economy.
Argument for decline scenario: last day of the week and what is more the last day of the month. August closing flows may strengthen JPY. Also, a very intricate Ukraine situation – which may develop over the weekend – does not support risk exposed long positioning.
In addition, bulls scenario is limited in our view by the previous high (due to the factors associated with Ukraine) and we do not believe, that demand will find enough strength to establish a new HH. This clearly worsens the potential profit-to-risk ratio for buyers.
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