Bias: Bullish Toward Channel Top Near 127
Point to Establish Long Exposure: Into Ichimoku Cloud in the 122.18-123.06 region
Invalidation Level: Channel Low & 100-dma 121.55
Target: 127+
The JPY has strengthened vs. the USD ~0.5% on the weekly open after China's Shanghai Index dropped 8.6% to open the week. However, the risk-off sentiment seems to be contained, as is common in clear trends, while technical indicators, specifically Ichimoku & the Andrew's Pitchfork look to provide support.
Looking for a move to the top of the channel on the FOMC announcement later this week. Resistance will be a focal point for many institutions at 124.40 as it has held and allowed USDJPY to print a lower high three times since mid-June.
A break and close above resistance will continue to affirm that upside target of ~127.
Protective stops are placed below the lower median line of the pitchfork and a great deal of force would likely be needed to get there in the form of larger Risk-off sentiment from continued deterioration in global equity and commodity markets.
Shorter-term: if the Tenkan-Sen or Conversion line (9-period midpoint) continues to point higher, the bias will remain bullish. If the Tenkan-Sen (black line on chart), turns south, the immediate view will be neutral for larger bias higher.
Other Key USDJPY Levels of Focus:
USD/JPY
* 3rd resistance: 124.38 76.4% Fib Resistance of Corrective Range
* 2nd resistance: 124.19 Lower high & July 23 high
* 1st resistance: 123.57 July 22 low
* Spot: 123.20
* 1st support: 122.92 55-DMA
* 2nd support: 121.55 Protective Stop & 100-DMA
* 3rd support: 120.51 July 8th low & May 5 high
