USD/JPY: Ichimoku Cloud strategy playing into the bull's hands for a run to 78.6% Fibo retracement target of 112.55
- USD/JPY has been testing the upside towards the 112 handle and topped out at 111.88.
- USD/JPY currently trades at 111.85, up from a low of 111.72.
- Ichimoku Cloud offering support on an hourly basis with daily and 4hr components aligned bullishly.
- The price is climbing through the 4hr Tenken-sen to the upside and supported by daily Tenken-sen.
USD/JPY was solid despite the sell-off on Wall Street overnight, as investors ponder as to whether a trade deal between the Chinese and US can realistically be salvaged this month.
Robert Lighthizer very cautious in his rhetoric last week, proclaiming that there is still a lot of work to do, including trying to resolve how structural reforms that China needs to adhere could be enforced. “If we can complete this effort - and again I say IF ... we might be able to have an agreement that helps us turn the corner in our economic relationship with China,” Lighthizer said in testimony to the U.S. House Ways and Means Committee last week - in stark contrast to yesterday's upbeat WSJ weekend article.
Meanwhile, USD/CNH is bid up on the news that China has softened its growth projection for 2019 from 6.5% to 6-6.5%. This is giving the dollar a boost across the board and supporting the upside in USD/JPY.
USD/JPY levels
The Ichimoku Cloud is favouring a break of the 112 handle with the price supported on the 1hr cloud support and breaking up through the Tenken-sen baseline. The 4hr Tenken is being tested by the price as well with all other conditions met for a buy:
- Price must close above the Cloud.
- Cloud ahead must be bullish.
- Conversion Line (Tenken-sen) is greater than the baseline.
- Lagging Span is greater than or crosses above the cloud.
On a break of 112, there are good prospects for a continuation which would bring the Lagging Span on the daily chart through the cloud and point towards a sustained rally on the new handle towards the 78.6% Fibo retracement target of 112.55.
Author
Ross J Burland
FXStreet
Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.
