USDJPY Breakout Testing Initial Resistance Ahead of U.S. GDP
- USDJPY breakout coming into first zone of resistance / 2007 highs
- Updated targets & invalidation levels heading into June trade
- Event Risk on TapThis Week
Chart Created Using FXCM Marketscope 2.0
- USDJPY testing key near-term resistance confluence 1.2413/35
- Breach targets objectives at 125.62/70 backed by ML resistance (~126.40) & 128.12/18
- Interim support with the May TL backed by 121.83-122- bullish invalidation
- Daily RSI in overbought- Constructive while this condition holds
- Event Risk Ahead: Japan Jobless Rate, CPI & Industrial Production tonight & U.S. 1Q GDP on Friday
Notes:USDJPY has been trading within the confines of a well-defined median-line formation with today’s rally stretching into the first level of significant resistance at 124.13/35. This zone is defined by the 2007 high, the 1.618% extension of the advance off the December low, near-term MLP resistance & a slope line extending off the January 2015 high (daily chart).
Intra-week divergence into the highs leaves the pair vulnerable for a pullback below this threshold with a break below the highlighted region into 123.53 shifting the near-term focus towards the lower MLP / 122.97. The broader bias remains constructive while above the 122-handle.
Bottom line: We’ll be looking for either a break above 124.35 or a break below this formation for guidance heading into June trade with the broader bias weighted to the topside above 122. A topside break keeps the long bias in play targeting 125 backed by 125.67/70. The average true range is rather tight here so to accommodate the near-term breakout we’ll look for a larger portion of the range with a third of the daily ATR yielding profit targets of 26-29 pips per scalp. Caution is warranted heading into U.S. event risk tomorrow morning with end of week/month flows also likely to fuel added volatility in USD crosses.
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Relevant Data Releases
Other Setups in Play:
- AUDUSD Testing Key Support- Short Scalps Vulnerable Above 7680
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- GBPUSD Longs Favored Above 1.5540- Scalps Target May Highs
- EURCAD Pullback Stalls at Support- Sub 1.3538 to Negate Bullish Bias
- Scalp Webinar: USD At Risk For Bearish Invalidation- 11,737 In Focus
- NZDJPY Rebound Testing Resistance- Scalps Target 89.50 Inflection Zone
---Written by Michael Boutros, Currency Strategist with DailyFX
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.