If the given resistance holds, it is likely that bears could prevail in the market in the short run.
Economic Calendar
This week there are a couple of US data releases on the economic calendars that are shown as high impact.
On Thursday, the US ADP Non-Farm Employment Change will be published at 12:15 GMT. Although, note that this is one of the releases that should not have a high impact mark and be discussed by financial media, as it has lost its power to impact the financial markets.
Due to that reason, since October 2018 our analysts ignored this data release. Recently, due to the possibility that it might have regained its strength, data was checked.
During this summer, five minutes after the data release there were moves from 5.2 to 15.2 pips on USD/JPY chart.
On Friday, US employment data will be published. The event will have three numbers being revealed – the Average Hourly Earnings, Non-Farm Employment Change and Unemployment Rate.
Due to each of the numbers impacting the rate differently by pushing the value of the USD up or down and with a different strength, the event has a wide range. Namely, since April the USD/JPY has moved from 13.4 to 38.9 pips due to the US labour data.
USD/JPY short-term daily review
Yesterday, the USD/JPY currency pair reversed north from the lower boundary of the short-term descending channel at 105.85. During Wednesday morning, the pair was testing the resistance formed by the 100-hour SMA at 106.23.If the given moving average holds, it is unlikely that some upside potential could prevail in the market in the short term. Also, note that the exchange rate is supported by the 200-hour SMA at 106.05. Thus, the rate could consolidate between the given SMAs today.
From a theoretical point of view, it is likely that bears could prevail in the market in the short run, as the pair could reverse south from the upper channel line at 106.33. It is unlikely that the rate could decline lower than the weekly PP at 105.82.
Hourly Chart
On the daily candle chart, the pair trades below the daily simple moving averages. It is an indicator of the rate being oversold.
Meanwhile, note that the rate has been trying to surpass the resistance level formed by the Fibonacci 23.60% retracement at 106.98 since the beginning of August. If the given resistance holds, some downside potential could prevail in the market.
Daily chart
Read More: Technical Analysis
Volume of long positions decreased
On Wednesday, 66% of USD/JPY open position volume on the Swiss Foreign Exchange was in long positions.
Meanwhile, trader set up orders were neutral. Namely, in the 100-pip range 59% of pending orders were set to sell and 41% were to buy.