Bulls in the USD/JPY are attempting to break through the monthly supply zone, but have so far failed.
The daily chart is indicating that another bullish move from support is on the cards.
On the longer-term charts, the uptrend in the USD/JPY is well defined, but the price has entered supply territory, and it will take another surge in the greenback to go over the line from a broad-based perspective.
The DXY is currently meeting a crucial daily support area as follows:
There will be a case for the USD/JPY to rise if this support structure maintains.
Buying at resistance, on the other hand, should not be part of a trader’s strategy.
The chart below depicts the yen’s market structure from the top down, concluding that a long position should be taken with precautions to limit downside exposure and the danger of a losing transaction.
The price is in a well-defined uptrend, as seen, but it is currently approaching what would be considered strong monthly resistance.
This suggests that, despite having already retraced to the 38.2 percent Fibonacci, the price might easily amount to a negative drop.
With that stated, the June candle did close higher than the previous monthly highs, and 110.85 might potentially be considered near-term support:
The weekly closing was bullish as well:
The price was rejected at the start of the monthly resistance region, but that does not rule out the possibility that the wick that was left may be filled in on a retest to the upside in the following days.
However, given the monthly resistance, bulls may be compelled to attempt such a feat after last week’s initial failure.
This may easily lead to the bearish scenario below, which includes a retest of past resistance and the convergence of a 61.8 percent Fibonacci retracement:
On a daily basis, there is a positive scenario based on daily support and the 61.8 percent Fibonacci confluence, from which bulls could attempt another test of monthly resistance.
If the price rises, it will fill in the weekly wick and have a decent possibility of breaking through monthly resistance, resulting in a new weekly and daily high.
The -272 percent Fibonacci retracement near 111.90 is a potential goal point for the boldest of the bulls, ahead of the 61.8 percent near 112.20.
In order to limit possible losses from failures beyond one’s entry point, a trade can be taken from the following bullish structure at a lower risk.
A break of the 4-hour barrier at 111.20, for example, would be bullish and might spark enough renewed demand:/n
