USDJPY Weekly Forex Forecast – 17th to 21st Oct 2016

Technical Outlook: USDJPY continued to push higher last week breaking above 104.00 handle. But the upside momentum could be at risk with some signals showing a bearish pullback in prices. Firstly, note the head and shoulders pattern with the right shoulder being formed as prices are currently attempting to break out from the resistance zone of 104.27 – 104.07. As long as this resistance holds, expect downside risks in USDJPY which is also validated by the Stochastics oscillator where we notice a strong bearish divergence that has been forming. We expect a near term correction down to 102.56 – 102.46 support level if the head and shoulders breaks down followed be a dip to 101.70 – 101.45 lower support level. The bearish view is invalidated if USDJPY continues above 104.27 and potentially forms a higher high above 104.58.

Fundamental Outlook: It is a rather slow week as far as Japan is concerned. But the fundamentals from the US will remain the key factor in driving prices in USDJPY. As far as fundamental risks are concerned, the October 19 third US presidential debate will be key in determining the market sentiment. With Republican candidate Donald Trump already losing out in the first two debates, this third debate could be crucial and could see Trump making a comeback. The topics in the debate will include key issues such as immigration and economy.

USDJPY Weekly Forex Forecast – 10th to 14th Oct 2016 – BULLISH