CMC Markets News: Taking Advantage of the Japanese Yen's Weakening to Find Trend Trading Chances

SDJPY and other JPY currency cross-pairs have been on a bullish run, while the Japanese Yen has been losing value throughout March, with the currency recently reaching an almost 7-year low versus the US Dollar. This is due, in part, to the BoJ's and the Federal Reserve's divergent monetary policy orientations, as well as inflationary pressures, since Japan is a net importer of numerous major commodities. If these two elements stay unchanged in the near term, there may be a fundamental and technical rationale to continue seeking for long chances in JPY cross-pairs.

The monthly USDJPY chart below shows the price nearing the June 2015 high of 125.85 (shown in red), as well as two additional major levels of support/resistance (marked in pink), at about 123.50 and 121.50. With just one trading day remaining in March, a positive outlook is more likely if the month concludes solidly above at least one of these support levels.

The weekly chart below shows an uptrend, with higher highs and lower lows in price action, with the 10, 20, 50, and 200 MAs lined up and exhibiting solid bullish geometry. The MACD and RSI indicators indicate positive convergence with price, suggesting that the upswing may still have some traction.

An uptrend in price activity can also be observed on the daily chart below, with repeated higher highs and lower lows. The 10, 20, 50, and 200 MAs are aligned, heading higher and spreading out, confirming the existing uptrend. The MACD and RSI indicators are converging bullishly with price, which might indicate that the uptrend is continuing gaining traction.

Price has begun to retrace back into the 'buy zone,' defined as the region between the 10 and 20 MAs, and is now challenging the horizontal level of support at 121.50. A bullish candle printing in this level might signal the start of a new upward trend. If the 123.50 level breaks to the upside, there may be additional chances to purchase on the horizon, both on this timeframe and on lesser timeframes such as the four-hourly, and the price may go up to the next significant level of resistance around 125.85, and maybe beyond, if the uptrend continues.

Should the 123.50 level prove too strong, an alternate scenario would be a move back down to support around 118.00.