Short-term sell opportunity for day and swing traders as USD/JPY pair forms head and shoulder pattern on 4Hour chart. read through to know if this is a viable trading idea.
Economic News on USD
Annualized change in inflation- the acclimated value of all goods and services produced by the economy.
While this is q/ q data, it’s reported in an annualized format ( quarterly change x4). There are 3 accounts of GDP released a month apart – Advance, Primary, and Final.
The Advance release is the foremost and therefore tends to have the most impact, It’s the broadest measure of economic exertion and the primary indicator of the economy’s health.
It’s released quarterly, about 30 days after the quarter ends, If the’ Factual’ result is higher than ‘Forecast’ also good for the currency.
| Currency | Forecast | Previous |
| USD | 2.6% | 6.7% |
The number of individuals who filed for joblessness insurance for the first time during the past week.
This is the nation’s foremost economic data. The demand impact fluctuates from week to week-there tends to be more concentrated on the release when dealers need to diagnose recent developments, or when the reading is at extremes.
Although it’s generally viewed as a lagging index, the number of jobless people is an important signal of overall economic health because consumer spending is largely correlated with labor-market conditions.
Unemployment is also a major consideration for those steering the country’s fiscal policy; Released weekly, generally on the first Thursday after the weekends,’ Factual’ lower than ‘Forecast’ is good for the currency.
| Currency | Forecast | Previous |
| USD | 290K | 290K |
Economic News on JPY
Though Source doesn’t give an exact release time-this event will be listed as ‘Conditional’ until the rate is published. Source changed release frequency from semiannually to quarterly as of Jan 2016
It provides valuable insight into the bank’s view of economic conditions and inflation-the crucial factors that will shape the future of fiscal policy, Released quarterly.
If the result is more hawkish than anticipated is good for the currency.
The source doesn’t give an exact release time-the event will be listed as ‘Conditional’ until the statement is issued. Source first released in Jul 2008.
This is changed release frequency from about 14 times per year to eight times per year as of Jan 2016, Care It’s among the primary tools the BOJ uses to communicate with investors about fiscal policy.
It contains the conclusion from their decision on asset purchases and commentary about the economic conditions that affected their decision.
Most importantly, it projects the economic outlook and offers suggestions on the result of coming votes;
Scheduled 8 times per year, Further hawkish than anticipated is good for the currency.
Pair Observation
Firstly Pair over the 4 Hour time frame is spotted to be the formation of the Head and Shoulder pattern considered by technical analysts and traders as a reversal chart pattern.
It is formed by a peak (shoulder), followed by a higher peak (head), and then another lower peak (shoulder). However, the pair is currently on the neckline which is may break down soon.
Technical Indicator
Here the stochastic indicator is already at the oversold level and will not be considered relevant in this scenario. Indicators are lagging though they play a good role in confirmation. Paying attention to the following pair may be an insight as they are strongly positively correlated. EUR/JPY, GBP/JPY.
Conclusion
It’s a call for a sell ‘short’ bias, Usd/Jpy pair may rally down with good momentum if the outcome of the News release on Advance GDP q/q is below or equal to 2.6% and Unemployment claims are greater than 290k.
“Chinedu is a Trader and content writer, With a passion for educating others about the financial markets. Through his writing, he works tirelessly to share insights and knowledge gained from years of experience trading in the financial market. He is dedicated to helping others achieve success in their journey by providing valuable information on what works and what doesn’t.
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