Following up my last week's IDDA analysis, the USD JPY Ichimoku cloud confirmation finally showed its pretty face on the daily time frame! I've already shared our Ichimoku-based trading strategy with our investing group members. But because I love ALL traders, here is an IDDA analysis just for you.
1- Technical Points: USD JPY Ichimoku Cloud Confirmation
Daily Time Frame: We saw the first Ichimoku point confirmed last week, when the Kijun line crossed above the Tenkan line on the daily time-frame. On Monday's Asian session we finally got the second USD JPY Ichimoku cloud confirmation we were craving for.
This brings traders with medium risk tolerance on the trading table.
USD JPY Ichimoku Cloud Confirmation - Daily Time Frame
With this, USD/JPY seems to have bottomed out at 50% Fibonacci level, and could be on its way to the 23% Fibonacci and beyond. Pivot zone remains between 112.84 and 111.68. Support levels are at 109.41 and 107.32.
Monthly Time Frame: On the monthly chart, the pair has formed a gigantic bullish engulfing. It appeared after April's super indecisive Hammer Doji candle. The pair remains above the monthly Ichimoku cloud. This means we already have the big-picture USD JPY Ichimoku cloud confirmation.
USD JPY Ichimoku Cloud Confirmation - Monthly Time Frame
2- Fundamental Points
The second point of the IDDA suggests looking at the economic and political developments that could impact the currency pair.
US Side: On the political front, Russian related testimony from Sally Yates put pressure on the Trump administration. The April NFP report printed an upside surprise, however the details of the jobs report failed to impress. Despite all this, the USD managed to rally against most major counterparts on Monday.
Coming up: US Wholesale Inventories (MAR F) on Tuesday at 2 PM.
Japan's Side: Japanese traders came back home after the Golden Week holidays to impressively strong JPY. The main reason could be the French Election results, which made the Japanese Yen a safe haven among forex traders.
Coming up:
- BOJ Summary of Opinions at April 26-27 Meeting, Tuesday at 11:50 PM GMT.
- Japan's Leading Index, Wednesday at 5 AM GMT.
- Japan's Trade Balance, Wednesday at 11:50 PM GMT.
3- Market Sentiment
Market sentiment analysis is the 3rd point of the IDDA. Retail trader data shows 46.2% of traders are net-long the USD/JPY on Monday's Asian session. The percentage of traders net-long is now its lowest since Dec 12 when USDJPY traded near 114.975. The number of traders net-long is 1.7% higher than yesterday and 28.1% lower from last week, while the number of traders net-short is 27.2% higher than yesterday and 11.6% higher from last week.
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We typically take a contrarian view to crowd sentiment. The fact traders are net-short suggests USD/JPY prices may continue to rise. Traders are further net-short than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger bullish contrarian trading bias. This adds on to our daily time frame USD JPY Ichimoku cloud confirmation.
Trading Strategy Based on USD JPY Ichimoku cloud confirmation
As 4th point of the IDDA, you must calculate your risk tolerance before deciding on which trading strategy is suitable for your portfolio. Join us in our daily strategy development room by becoming a member of our investing group!
Disclaimer: Forex is one of the HIGHEST risk investing instruments there is. If you don't have sufficient risk tolerance to trade forex, you can try investing other online securities.
Combining all points of the IDDA, here are Invest Diva's calculations for important approximate levels to keep an eye on:
| Support Levels | Turning Point | Resistance Levels |
|---|---|---|
| 107.32 | 111.68 | 114.29 |
| 109.41 | 112.84 | 115.73 |
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