USD/JPY Forecast: Double top, bearish divergence almost confirmed ahead of payrolls release

Omkar Godbole FXStreet Contributor

The Dollar-Yen pair rose to a high of 114.82 before ending the day at 114.06. The spot is extending the losses in Asia and was last seen trading around 113.80 levels.

Weak payrolls could aid correction

Markets believe the December rate hike is pretty much a done deal. The payrolls data is unlikely to alter the expectations significantly. Nevertheless, a scenario of weak payrolls (below 150K) and a weaker-than-expected wage growth numbers could yield a much deeper retracement in the USD/JPY pair.

On the other hand, strong wage growth numbers could yield a fresh rally to 115.00 levels.

Technicals- bearish development almost confirmed

Daily chart

The bearish price RSI divergence is almost confirmed, however, it is advisable to wait for the RSI to break below 70.00 levels.

Hourly chart

The hourly chart shows a double top formation. Breach of the trend line support would open doors for 112.80 levels.
On the higher side, only a daily close above 115.00 would negate the bearish price RSI divergence seen on the daily chart and open doors for the continuation of the rally.

AUD/USD Forecast: Rising bottom formation established

Daily chart

Pair’s recovery from 0.7370 on Thursday has put in place a rising bottom formation.
However, only a daily close above 0.75 would add credence to the rising bottom formation and open doors for 0.7558 (Oct 28) levels.
On the lower side, breach of the rising trend line would shift risk in favor of a drop to 0.7311 (Nov 21 low).
Gold prices could turn out to be a major beneficiary of the correction in the US dollar. Consequently, the odds of a bullish break in the AUD/US above 0.75 handle are high.

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

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