- SWFX market sentiment is 70% bullish (-2%)
- Pending orders in the 100-pip range are 57% to BUY
- Minor US releases
The previous short term channel down pattern of the USD/JPY pair has been broken. Meanwhile, the long term narrow channel down pattern remains in force, which indicates that this week the currency pair will continue to decline.
The US National Association of Realtors reported that in January the existing home sales slumped for the second month in a row. Contrary to economists' expectations for the number to have surged 0.9%, existing home sales declined 3.2% in the reported month.
It was the largest drop on year-to-year basis over the three-year period. Yet, the demand for housing is increasing due to the boosting labor market, which results as a shortage of buying opportunities for some potential first-time buyers.
Minor events on Monday
The calendar for Monday has some minor events, which might cause a reaction in the financial markets by affecting the underlying strength of the US Dollar. First will be the release of the US New Home Sales data at 15:00 GMT. However, the release will not be covered by the Dukascopy research team.
A more important event will be the speech of FOMC Member Quarles at 20:15 GMT. That event might shed some more light on the future monetary policy of the US.
USD/JPY dominated by bears
Despite two attempts to breach 107.20 during the previous 24 hours, the strong resistance of the 55–, 100- and 200-hour SMAs and the monthly S1 was strong enough to limit any gains above this mark.The bearish sentiment was strengthened early in this session when weaker US Dollar put downward pressure on the pair, thus resulting in a 75-pip decline within a couple of hours. The US Dollar is moving in a down-trend that is likely to dominate the market in this session, as well.
Technical indicators are likewise supportive of the bearish scenario. The rate is currently pushing towards the weekly S1 at 106.05, while the 2017/2018 low of 105.67 should be the daily low.
Given that no notable fundamentals are to be released today, the Greenback is unlikely to breach the psychological level of 107.00.
Hourly Chart
After the recent review of the pair it was discovered that the daily chart's channel down pattern is better drawn by tilting it a little bit to the downside.
If one draws the channel like that, he can notice that the pair has already confirmed the upper trend line of the channel down pattern. Moreover, the supports near the 107.00 mark are already serving as resistance. Due to that reason expect a decline down to the 104.00 mark during the upcoming months.
Daily chart
SWFX traders are on the long side, as 70% of open positions were bullish during the morning hours. In addition, 54% of pending orders are to buy the Greenback.
Meanwhile, the market sentiment of OANDA traders remains strongly bullish with 62% long positions. In addition, the Saxo Bank's published market sentiment is 54% long
Spreads (avg, pip) / Trading volume / Volatility