USD/JPY: dollar is strengthening 03 February 2021, 11:59

USD/JPY: dollar is strengthening

03 February 2021, 11:59

Scenario
Timeframe	Intraday
Recommendation	BUY STOP
Entry Point	105.20
Take Profit	105.60
Stop Loss	104.90
Key Levels	103.90, 104.20, 104.50, 104.75, 105.00, 105.16, 105.33, 105.60

Alternative scenario
Recommendation	SELL STOP
Entry Point	104.70
Take Profit	104.20
Stop Loss	105.10
Key Levels	103.90, 104.20, 104.50, 104.75, 105.00, 105.16, 105.33, 105.60

Current trend

The US dollar maintains an upward trend against the Japanese yen, renewing local highs from November 12, 2020. Now, the American currency has added about 0.04% and is testing the strong resistance at the psychological level of 105.00. It is supported by the prospects for the early approval of a new stimulus package for the national economy of $1.9 trillion, which is likely to help the country recover to pre-crisis levels as early as 2021 (if the epidemiological situation in the country and the world does not begin to deteriorate again).

Wednesday’s macroeconomic statistics from Japan puts moderate pressure on the yen's position. Thus, the manufacturing PMI index from Jibun Bank in January fell from 47.7 to 46.1 points, which was worse than the average forecasts of analysts.

Support and resistance

Bollinger bands are growing steadily on the daily chart. The price range is actively expanding from above but not as fast as the “bullish” dynamics develop in the short term. The MACD indicator is growing, maintaining a strong buy signal (the histogram is above the signal line). Stochastic, having approached its highs, reversed into a horizontal plane, reflecting that the dollar may become overbought in the ultra-short term.

It is better to keep the current long positions on the instrument until the signals from technical indicators are clarified.

Resistance levels: 105.00, 105.16, 105.33, 105.60.

Support levels: 104.75, 104.50, 104.20, 103.90.

Trading tips

Long positions may be opened after the breakout of 105.16 with the target at 105.60. Stop loss – 104.90. Implementation period: 1–2 days.

Short positions may be opened after the return of the “bearish” dynamics and the breakdown of 104.75 with the target at 104.20. Stop loss – 105.10.