A USD/JPY Assessment

The pair reached the diagonal resistance trend line of the wide trend channel in which it has been developing since December 2016, but it made no attempt to break out and renewed its depreciation.

The depreciation could be just a test of the support at 110.50 in order for the pair to gather liquidity before it attempts to break out above 111.20. The alternative scenario is for a continuation of the depreciation toward 110.20 – 110.00.

The most extreme scenario is for the breakout above the red trend line to have been false and for the USD to continue falling, moving within the red trend channel.

We could think about a long term rally only after a breakout above the red trend line, a breakout above 111.20 and if the pair remains above that level.

GBP/USD May Consolidate Before It Continues Dropping To The Next Support

The support at 1.2720 stopped the depreciation of the pair, if only temporary. After the pair rebounded to 1.2870, which is practically the first resistance level to the upside, today the GBP returned toward the support at 1.2720.

It is more than clear that the move north was corrective, but I suppose that the pair will consolidate between the abovementioned levels for a little while longer. There may be a test of the resistance levels at 1.2850 and 1.2920, which is made clear on the H4 time frame.

On the larger time frames, however, the pair remains very bearish, and the next support zone toward which the pair should head for after the end of the correction is around 1.2600 – 1.2570.

The alternative scenario is for a continuation of the depreciatin without a deeper correction.

The Forex Calendar For This Week

Here are the events that traders should be aware of before opening new trades this week:

There are no events on Monday.

On Tuesday we can expect the announcement of the UK Average Earnings Index and the Australian Wage Price Index.

Wednesday is quite eventful: the UK CPI will be announced, then US Core Retail Sales, Retail Sales and Crude Oil Inventories. Also, we can expect the Australia Employment Change and Unemployment Rate.

On Thursday will be announced the UK Retail Sales, the US Building Permits and the Reserve Bank of Australia Governor Lower will make a speech.

Finally, on Friday, we can expect the Canadian CPI.

The TRY Crashed Over The Course Of Several Hours

We have seen crashes like this more than once, when a country defies the world economic and political status quo.

The USD/RUB situation was similar when Russia annexed Crimea.

Yesterday the TRY lost 19% of its value over the course of mere hours when the relationship between the USA and Turkey took a nosedive due to the situation around the detainment of the American pastor Andrew Brunson. President Trump used his presidential authority to double the tariffs on steel and aluminum coming from Turkey.

And while the TRY was crashing and President Erdogan was reassuring his people and was encouraging them to exchange their savings into Turkish Lires, his son-in-law and finance minister Berat Albayrak made a statement that his country would follow a new economical approach based on a “strategic way of thinking”.

It is interesting to see whether the Turkish people, after electing a President who aims to roll back many of Kemal Atatürk’s reforms, would follow blindly the call to exchange what little is left of their financial security into the devaluated Turkish Lire.

The USD/JPY Depreciation Continues Toward The Support Zone At 110.20 – 110.00

The pair continues moving slowly and correctively within an unbroken trend channel toward its first target to the downside, which is the support zone at 110.20 – 110.00.

I think that despite the slow and very hesitant move south the depreciation may reach 109.60 – 109.40. That is the zone within which the USD could find strong support and from there it could renew its upward trend.

The alternative scenario in case there is a breakout below that support is for the pair to continue depreciation. For the moment that scenario appears less probable, not to mention that the USD remains exceptionally strong against all other currencies – so much so that its weakness against the JPY causes confusion.

For the moment we can expect the depreciation of the USD to the first support at 110.20 – 110.00.

The Existing Downward Trend Would Lead To A Break Out Below 1.1510

The pair tested firmly the break out below the trend line (in light blue) and in the moment it is trading in a consolidation between the trend line, which has become a support and the dynamic  support above 1.1570.

If we examine the D1 time frame we could say with certainty that the trend is firmly bearish. Now we have to see whether there will be a breakout below the support at 1.1570 until the end of today’s American session or the pair will close the D1 bar once again below the diagonal support as well as the kind of bar it will form when it closes.

In my opinion, in case the pair does not manage to break out below 1.1570 the bar may be a doji or a spinning top, after which the pair will test 1.1510 and if it breaks out below that level it will head for 1.1300.

The alternative scenario is for a rally to 1.1700 and 1.1750.

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