USD/JPY: restoration of lost positions 24 February 2021, 10:07

USD/JPY: restoration of lost positions

24 February 2021, 10:07

Scenario
Timeframe	Intraday
Recommendation	BUY STOP
Entry Point	105.80
Take Profit	106.25
Stop Loss	105.50
Key Levels	104.50, 104.75, 105.00, 105.17, 105.40, 105.75, 106.00, 106.25

Alternative scenario
Recommendation	SELL STOP
Entry Point	105.35
Take Profit	105.00, 104.75
Stop Loss	105.70
Key Levels	104.50, 104.75, 105.00, 105.17, 105.40, 105.75, 106.00, 106.25

Current trend

USD is noticeably strengthening against JPY at today's trading in Asia, developing the correctional impulse formed the day before and recovering from the active decline at the end of last week.

Investors reacted quite optimistically to the speech of the US Fed Chair Jerome Powell in the framework of the annual report to the US Congress. The head of the regulator praised the success of American health care, noting that the current pace of vaccination gives hope that 2021 will pass without new lockdowns. Indirectly, Powell also called on Congress for approval of the USD 1.9 trillion stimulus bill, despite criticism by many analysts for being too expensive. Markets fear that such a significant injection of funds into the economy will provoke a surge in inflation and in stock indices, which are already largely overvalued.

Interesting statistics from Japan will appear only on Friday with the release of January data on industrial production and retail sales.

Support and resistance

In the D1 chart, Bollinger Bands are reversing horizontally. The price range is almost unchanged, but it remains rather spacious for the current level of activity in the market. MACD has reversed upwards preserving a sell signal (located below the signal line). Stochastic, having approached the level of "20", reverses in the direction of growth, reacting to the corrective dynamics of the last two trading sessions.

Resistance levels: 105.40, 105.75, 106.00, 106.25.

Support levels: 105.17, 105.00, 104.75, 104.50.

Trading tips

To open long positions, one can rely on the breakout of 105.75. Take-profit – 106.25. Stop-loss – 105.50. Implementation time: 2-3 days.

A rebound from 105.75 as from resistance followed by a breakdown of 105.40 may become a signal for new sales with the targets at 105.00–104.75. Stop-loss – 105.70.