Technical Analysis

Japanese Yen Futures (6J) Technical Analysis

The Dollar is weakening, and we are seeing a resurgence in currencies like the Yen. In this week’s technical analysis, we look at the weekly and daily time frames, indicators, and levels to watch.

Weekly Chart:

  • Downtrend Line: We have noticed a descending trendline since early 2020, confirming a long-term downtrend. However, the recent candles suggest a potential reversal as prices are pushing higher towards this line. A decisive close above this trendline could indicate a change in trend, which we should watch closely.
  • Support Zone: There’s a clear support zone marked between 0.0066110 and 0.0068500. Prices have respected this zone multiple times, making it a significant level for reversals. If the bulls are strong enough, we may not revisit this level for a while.
  • RSI Indicator: The RSI is currently above 60, which is bullish. If the RSI remains above the 60 level, it would support the bullish case further as long as it doesn’t reach overbought territory. In the recent price action for 6J, the chart has rallied hard with few pullbacks. When the RSI hits overbought in a market like that, usually it is a bearish signal.
weekly chart of 6j futures with downtrend line, rsi and support zone

Daily Chart:

  • Moving Averages: The chart shows the 50-day and 100-day Moving Averages. The price has recently crossed above the 50-day MA, which could act as support in the short term. If prices hold above this MA, it could be a good entry point for a long position.
  • Volume Profile: The Volume Profile on the left side shows significant trading activity at lower price levels. The thinning out of volume at higher levels suggests less resistance and the possibility of a quicker move upwards if buying pressure continues.
  • SMA Convergence: The SMAs are converging, and the 50 is very close to crossing above the 100.
daily chart of 6j with down trend line, volume profile and moving averages

Trade Ideas:

  • Long Position: Longs could be taken if the price holds above the 50-day MA on the daily chart or breaks the descending trendline on the weekly chart. Initial targets could be set near the recent swing highs (0.0073), with a stop loss below the 50-day MA.
  • Short Position: If the price fails to break above the trendline and a reversal candle appears, a short position could be initiated with a target back to the support zone marked on the weekly chart.

Key Levels to Watch:

  • Resistance: The descending trendline on the weekly and recent highs on the daily. If these levels are broken, we could see further upside.
  • Support: The 50-day MA on the daily and the support zone on the weekly. These levels must hold to maintain the bullish outlook.