USDJPY Sideways Consolidation Sparks Potential for Corrective Decline

Zarith Sofea · 21 Feb 8.3K Views

XAUUSD


XAUUSD prices experienced a boost in the Asian trading session on Wednesday, extending a recent rebound. The primary driver behind this upward movement was the retreat of the U.S. dollar, as traders awaited more information on U.S. interest rates, particularly from the minutes of the Federal Reserve's late-January meeting.

Despite this positive movement, gold remained within a relatively narrow trading range of $2,000 to $2,050 per ounce. The consolidation reflects the uncertainty surrounding the outlook for gold, which is influenced by the potential for sustained higher U.S. interest rates. Traders are keenly observing any cues that might provide clarity on the Federal Reserve's stance, as this will significantly impact gold's future direction.

Currently, the $2,050 resistance level is a crucial point to watch. A break above this level could signal a bullish trend, potentially leading to a test of higher resistance levels. On the downside, a breach below $2,000 may indicate renewed bearish sentiment, potentially opening the door for a retest of recent lows.

Entry Suggestion 

Long Position (Buy): Consider entering a long position if gold breaks convincingly above $2,050. Set a stop-loss below $2,000 and target resistance levels at $2,080 and $2,100.

Short Position (Sell): A break below $2,000 could trigger a short position. Set a stop-loss above $2,050 and target support levels at $1,980 and $1,950.


USDJPY


The Japanese Yen (JPY) continued its sideways consolidative move against the U.S. dollar on Wednesday, maintaining a narrow range throughout the Asian session. The pair has been trading within a one-week-old range, with potential support and resistance levels clearly defined.

Currently, the mid-149.00s represent a critical level of support. A breach below this area could attract buyers near 149.25-149.20, followed by the 149.00 round figure and the 148.80-148.70 region, which has previously acted as resistance and should now serve as a pivotal point. A decisive move below 148.70 may indicate a near-term top for the USDJPY pair, signaling the potential for a meaningful corrective decline.

Entry Suggestion

Long Position (Buy): Look for opportunities to enter a long position if USDJPY bounces off the support around 149.25-149.20. Set a stop-loss below 148.70 and target resistance levels at 150.00 and 150.50.

Short Position (Sell): A break below 148.70 could trigger a short position. Set a stop-loss above 149.25 and target support levels at 148.00 and 147.50.


WTI 


Oil prices rebounded in the Asian trading session on Wednesday, driven by concerns over attacks on shipping in the Red Sea and growing expectations that U.S. interest rate cuts will take longer than previously thought. Brent crude futures rose by 0.36% to $82.64 a barrel, while U.S. West Texas Intermediate crude futures (WTI) were up 0.34% at $77.3.

The geopolitical tensions in the Red Sea are contributing to the uncertainty in the oil market. Traders are closely monitoring the situation, as any escalation could impact oil supply routes and potentially drive prices higher. Additionally, the expectation that U.S. interest rate cuts might be delayed is providing support to oil prices, reflecting the broader economic implications of interest rate decisions.

Entry Suggestion 

Long Position (Buy): Consider entering a long position if WTI breaks above the current resistance level at $77.50. Set a stop-loss below $76.00 and target resistance levels at $80.00 and $82.00.

Short Position (Sell): A break below $76.00 may trigger a short position. Set a stop-loss above $77.50 and target support levels at $75.00 and $73.00.


Conclusion

In summary, the daily analysis suggests a cautious approach in the gold market due to the narrow trading range, while opportunities may arise in the USDJPY forex pair based on potential support and resistance levels. The oil market remains sensitive to geopolitical events, with both upside and downside entry possibilities depending on the evolving situation.



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Paraphrasing text from FXStreet, Investing and Reuters all rights reserved by the original author.

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