USD/JPY Price Forecast January 5, 2018, Technical Analysis

The US dollar rallied a bit during the trading session on Thursday, but then pulled back to test the 112.50 level for support. We bounced from there, reaching towards the 113 handle. If we can break above the 113 handle, the market is likely to continue to go to the upside, perhaps reaching towards the 113.50 level before going to the 114 level after that.

Overall, if the market can break the 115 level later on, it becomes more of a “buy-and-hold” scenario. At that point, I think that the US dollar reaches towards the 120 handle after that. I think that plenty of volatility will work itself into the market place, offering plenty of opportunities to trade with a slightly upward bias. However, after the announcement if we were to break down below the 112 handle, I think we would go looking towards the 111 handle after that, as it has been structurally supportive. The 112 level is the 38.2% Fibonacci retracement level, as the 111 level is roughly the 50% Fibonacci retracement level. I believe that we are trying to form a large base to rally from, but that is typically a very messy affair in this pair, as seen on historical charts going back to the 1990s. Patience, and more importantly a reasonable trade size will be necessary.

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