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CHF/JPY. Will the bulls try to close the gap?

May 13 2019, 09:09 PM (BDT) | OlympTrade.com

 

Trading negotiations between the US and China have placed the Japanese currency under pressure. Japanese household spending reported on Thursday the 9th rose (the fact is +2,1% against the forecasted +1,7%). Unfortunately, this didn’t help the bulls.

Picture 1. Japanese household spending (YoY)

Right now, the Swiss franc is rising against the Japanese currency. Is it time for a full correction or it’s just a ‘bearish flag’? Let’s analyze the situation.

Technical analysis

On our working daily time frame the price broke the 23,6% Fibo correction up. There is a divergence between the price and MACD histogram. The RSI is returning back from oversold zone. What is important, is that the price made the gap shrink on the 6th of May. We think that the price could try to close this ‘window’ soon. As a result the target for the price is 109,279. There is a 38,2% Fibo correction level there.

Taking into consideration the global bearish trend we strongly recommend decreasing your position. If the pair breaks the level 109,279 the next target will become 109,793.








 

Picture 2. CHF/JPY. 1D TF.

https://www.tradingview.com/x/qoGSWE8K/

 

Summary: it is possible to open long positions if the pair breaks its short 9-EMA (108,642).    

Fundamental analysis

In Switzerland inflation is released on Tuesday (PPI for April). Japanese inflation is released on Wednesday – the forecast is +1,1%. The previous fact was 1,3%. If the fact is released better than the forecast, the Japanese yen can strengthen.    

 

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