USD/JPY – Forex Technical Analysis – Price Action Box Consolidation In Focus
- The USD/JPY is now trading within an established range, between 81.68 and 82.83, as can be seen on the daily timeframe dollar/yen chart below.
- This “box consolidation phase” is our focus heading into the week commencing 10th December; with this in mind we will be monitoring price action at the range extremities – as order flow often builds around these clear ranges – which can lead to increased volatility on a sustained breakout.
- Price closed the week around 35 pips below the recent range highs, after an earlier test of the recent resistance was rejected.
- It is not unusual to see an initial counter trend “false breakout” before the resumption of the overriding trend. Any drop to the downside would need to contend with the 23.6% Fibonacci retrace in the first instance.
- A sustained move below this initial 23.6% Fibonacci area could mark a downside breakout scenario, and a retest of the previous resistance area around 80.65 which may prove to be supportive on an initial test. This price structure technical level is aligned with the 38.2% Fibonacci retrace level as confluence.
- A sustained upside break above 82.83 brings the threat of a move back to the 84.17 swing high area and mid term trend resumption.
- We also note that the latest COT report update revealed a JPY net short position at 90K, versus the 79K prior reading, as yen FX futures short positioning continues to build.
Forex Price Action – Box Consolidation – USD/JPY