- USD/JPY holds key support zone
- Resistance test looms
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The medium-term positive technical structure in USD/JPY was seriously tested this week with the pair falling sharply to challenge the 120.40 78.6% retracement of the mid-May to June run up. The rate managed to hold this key level and perhaps more importantly the trendline connecting the January and April lows at 120.30. Weakness below there would have triggered a false pattern breakdown scenario and turned the medium-term picture negative. However, the successful hold of support raises the possibility that the correction has run its course and USD/JPY is ready to turn back up again. A trendline connecting the June/July highs comes in around 123.00 and traction above there is needed to confirm that a low of some importance is in place. Weakness back under 121.00 would raise concern that the correction is still ongoing, but only a move under 120.30 would turn the broader technical outlook negative.
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USD/JPY Daily Chart: July 10, 2015
Charts Created using Marketscope – Prepared by Kristian Kerr
Key Event Risk in the Week Ahead:
LEVELS TO WATCH
Resistance: 122.40 (Fibonacci), 123.00 (Trendline)
Support: 121.00(Fibonacci) 120.30 (Trendline)
Strategy: Buy USD/JPY
Entry: Buy USD/JPY at 121.05
Stop: Daily close below 120.30
--- Written by Kristian Kerr, Senior Currency Strategist for DailyFX.com
To contact Kristian, e-mail firstname.lastname@example.org. Follow me on Twitter at@KKerrFX.