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It’s another light day in terms of data releases, so I’m keeping tabs on this simple technical setup on USD/JPY.

Can this pair make another bounce off the rising channel support? Can USD/JPY maintain its currency strength?

Before moving on, ICYMI, I’ve looked at the EUR/GBP resistance test ahead of mid-tier releases from Europe. Check it out to see if it’s still a valid setup!

And now for the headlines that rocked the markets in the last trading sessions:

Fresh Market Headlines & Economic Data:

Upcoming Potential Catalysts on the Economic Calendar:

  • FOMC member Barkin’s speech at 1:00 pm GMT
  • ECB head Lagarde’s testimony at 1:40 pm GMT
  • U.S. CB consumer confidence index at 2:00 pm GMT

What to Watch: USD/JPY

USD/JPY 1-hour Forex Chart
USD/JPY 1-hour Forex Chart

This USD/JPY rising channel has been holding for more than a month already, and it looks like another test of support is due!

Is USD/JPY a buy or sell?

The pair is in the middle of a correction and is finding support around the 38.2% Fib, which happens to line up with the 200 SMA dynamic inflection point.

Will buyers return right here?

Stochastic is suggesting that the rally could resume soon since the oscillator is already pulling up from the oversold region.

Moving averages also confirm the presence of bullish momentum, as the 100 SMA is above the slower-moving 200 SMA.

A larger retracement could still dip to the 61.8% Fib closer to the channel bottom at 110.25. If any of these Fibs hold as support, USD/JPY could revisit the swing high at 111.12 or climb up to the channel top.

If you’re undecided about hopping in at market or waiting for a more conservative entry, you can also opt to scale in a long position at two or more areas.

The U.S. CB consumer confidence index might be worth looking at, as the projected improvement from 117.2 to 118.9 could be enough to push the Greenback higher.