Price & Time: USD/JPY 1998 High Still An Influence?
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- USD/JPY fails again near 121.50
- Double top trigger near 120.00
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The BOJ decision came and went last night with the Bank leaving monetary policy unchanged by an 8 to 1 vote (just as in recent meetings). The price action in USD/JPY in response was actually quite interesting as the exchange rate fell initially then rallied sharply to come within a pip of two-month highs before turning down aggressively. It could all just be month-end shenanigans, but classical technical analysis would suggest the rate is vulnerable here following that second failure in a week around 121.50 as it sets ups a fairly clear double top near the top end of the range.
The near-term cyclical view is predictably a bit of a mess given how choppy things have been these past couple months. However, last week’s high close in USD/JPY did occur exactly 17.2 years (Armstrong Pi cycle) from the high in 1998 so the exchange rate should probably be monitored closely here to see if this latest decline actually morphs into something. Traction under 120.00 would trigger the aforementioned double-top and set the stage for a move towards the bottom end of the range, but it is going to take traction sub-118.00 to get excited about anything of substance developing on the downside.
A daily close over 121.40 would invalidate the potential negative cyclical influence from 1998, but only a move through the 61.8% retracement of the June to August decline at 121.75 would turn the technical picture more clearly positive.
--- Written by Kristian Kerr, Senior Currency Strategist for DailyFX.com
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.