As mentioned in the Forex Review on Sunday evening, the USDJPY has been trending upwards. As the daily chart shows, price found support at the ATR (plus sign) and moved up to form a high at 111.109. Will this uptrend continue or could price hit a resistance area?
Looking at the USDJPY weekly chart, price is approaching a potential resistance area. There are several warning indications on the chart.
First, there is an ATR directly above price at 112.13. This indicates a potential resistance area that may push price down.
Two, the stochastics lines have exceeded the prior high in the stochastics and price is making lower highs (yellow lines highlight the divergence pattern). This indicates a potential hidden divergence pattern but a bearish candlestick must form to confirm the hidden divergence.
Three, both the RSI and ADX are indicating a bias to the short side is still dominant.
If price manages to close above the 112.13 resistance area, then the next area of potential resistance will be 114.55. However, prior to price reaching up to the 114.55, a support area will typically be required to fuel the move up to the 114.55 area. Based on the current weekly chart, more likely than not, the project support area (if price manages to close above 112.13), will be around 109.59.
Additionally, on Wednesday, February 20th, at 2:00 pm New York time, the FOMC Meeting Minutes will be released. While no surprises are expected, traders will be analyzing the minutes for indications as to when another rate hike is anticipated. Then on Thursday, the Core Durable Goods Order (month over month) will be released at 8:30 am New York time, followed on Friday by FOMC Member Williams, Clarida, Bullard, and Quarles participating in the panel discussion, "The Prospects for Inflation with a High-Pressure Economy", at the US Monetary Policy Forum in New York.