On Wednesday, the USD/JPY reversed its direction at the combined support of the 100-hour SMA and the lower trend line of a wedge pattern near 107.40.
By the middle of Thursday's GMT trading hours, the pair had surged and passed three technical resistance levels. Moreover, the rate had no more resistance as high as 108.00.
Economic Calendar
Markit is going to publish the US Flash Manufacturing PMI survey results on Thursday, May 21, at 13:45 GMT. This is the only data release this week, which could impact the USD/JPY through the strength of the USD.
USD/JPY short-term daily review
Yesterday, the USD/JPY currency pair re-tested the lower boundary of the rising wedge pattern. During Thursday morning, the pair was trading at 107.80.
From a theoretical point of view, it is likely that the exchange rate could trade upwards within the given pattern. In this case the rate could exceed the 108.00 level.
It is unlikely that bears could prevail, and the pair could breach the given pattern south due to the support formed by the 100– and 200-hour SMAs in the 107.40 area.
On the daily candle chart, the exchange rate has passed the resistance of the 55-day simple moving average, which kept the pair down since May 10.
In theory, next resistance on the daily candle chart for the pair are the 100 and 200-day SMAs near 108.30.
Daily chart
From a theoretical point of view, it is likely that the exchange rate could trade upwards within the given pattern. In this case the rate could exceed the 108.00 level.
It is unlikely that bears could prevail, and the pair could breach the given pattern south due to the support formed by the 100– and 200-hour SMAs in the 107.40 area.
Hourly Chart
On the daily candle chart, the exchange rate has passed the resistance of the 55-day simple moving average, which kept the pair down since May 10.
In theory, next resistance on the daily candle chart for the pair are the 100 and 200-day SMAs near 108.30.
Daily chart
Read More: Technical Analysis
Short sentiment continues to grow
On Tuesday, trader open position volume on the Swiss Foreign Exchange was 54% short.
On Wednesday, the sentiment was 56% short.
By the middle of Thursday's trading, 60% of volume was short.