USDJPY – Weekly Outlook- December 21 2018

Introduction

The USDJPY has been in a steadily rising bullish trend for about a period of 8 months now. The bullish trend shows weakness in the event of bearish technical reversal patterns. Join us this week as we take a look at the technical and fundamental events that are dictating the trend direction of the USDJPY.

Fundamentals

JPY National Consumer Price Index (CPI) Ex-Fresh Food (YoY) 

Notwithstanding an adverse actual result of the National CPI Consumer Price Index, published by the statistics Bureau as a measure of price movements,  the Japanese yen achieved a 2.22% gain in its exchange rate this week.

U.S GDP Annualized (Q3) 

The U.S GDP annualized was released with a shocking actual value (3.4%) as the consensus was expected to come out similar to the previous result (3.5%).

Technical

USDJPY: Weekly Chart

The USDJPY weekly chart is currently in a wide range of oscillation that has finally resulted in a bearish hidden divergence pattern.  The pattern buildup started from a breakdown of hidden bullish accumulation pattern triggered on 08 January ’18, leading to a 5.7% drop in the price of the pair.

A false break pattern concluded the bearish trend and gradually transitioned the pair into a triple bullish accumulation pattern. This bullish confluence of events forced the pair into a bullish trend that surged by 6.94%. 

All attempts by the bears to send the pair into a downward trend was nullified by a breakout of bullish accumulation. Such breakout patterns were triggered on 11 June, 20 August, 10 September and 29 October.

The current bearish hidden divergence is first triggered by a breakdown of bullish hidden accumulation in view, and finally a dead cross of the MACD oscillator. This signals a stronger Japanese Yen as opposed to the USD.

USDJPY: Daily

A closer view from the daily chart presents more time-saving signals that resulted into swing high and swing lows of the USDJPY, great for swing trading.

The initial bearish accumulation pattern on the daily chart gets the pair flowing into a series of consecutive bearish closing candles from which price plummets by 1.8%. An opposite hidden bullish accumulation pattern on 29 October ignites a bullish trend resulting in a 1.5% increase in favor of the USD.

From that point onwards, the price quickly entered into a more compact descending bearish channel, by first triggering a hidden bearish accumulation pattern in combination with a regular bearish accumulation on 14 November, and finally a breakdown of the bearish inside bar on 14 December.

USDJPY: 4 Hour

Binary options traders will find the 4hour chart tailored to their need considering it offers reliable triggers and it doesn’t take too long for the setups to buildup. A false break on 03 December started the initial swing low on the above chart. Another breakdown of bullish accumulation on 05 December resulted in a 0.5% drop in price.

The above 4hour chart finally shows a breakdown of the bearish inside bar pattern of the daily chart. Here it triggers a breakdown of bullish accumulation, serving as a confirmation of the bearish trend resulting in a 2.2% price decline.

Conclusion

Based on the longer weekly chart technical setups, we believe the USDJPY currently maintains bearish sentiment, and we intend to allocate more risk capital to short selling setups that show up on the lower daily and 4hourly time frames.

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