USD/JPY Technical Analysis - USD/JPY Trading: 2015-09-08

Important statistics is to be released in Japan

The Japan's macroeconomic data is to be released early on Tuesday morning. In our opinion, the tentative outlook is positive for the Yen. Will the released figures make the Japanese currency stronger?

The July’s trade balance is to be released on Tuesday at 1:50 CET. We are expecting the negative balance to contract from 102.6 bln. Yens to 78.7 bln. Moreover, the current account balance is to be released. It is forecasted to widen from 558.6 bln. Yens to 1750 bln. On Monday China reported the record slump of 93.9 bln. in the foreign exchange reserves in August. They are down by 11% from their high of the 2nd quarter of 2014 and total now $3.557 trn. In our opinion, the descending Chinese reserves is a negative factor for the US Dollar.

On the daily chart the USDJPY:D1 is being consolidated after the slump. The prices are floating around the 200-day moving average. The Bollinger Bands have widened significantly which may indicate high volatility. The MACD and Parabolic Indicators give the sell signals. The RSI is below the level of 50 but has already lest the oversold zone. The bearish trend is likely in case the Yen surpasses the local low of 118.21 which can be used for entering the market. The initial risk limit can be placed above the last upper fractal at the level of 121.6. Having opened the delayed order the stop is to be moved every 4 hours to the next fractal high following the Bollinger and Parabolic Indicators. By doing this we adjust the potential profit/loss ratio in our favour. The most risk-averse traders may switch to the 4-hour chart after the trade and place there a stop-loss moving it in the direction of the trade. If the price meets the stop-loss level of 121.6 without reaching the order of 118.21, we recommend cancelling the position: the market sustains internal changes which were not taken into account.