Forex: USD/JPY Technical Analysis – Candle Setup Points to Gains
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- USD/JPY Technical Strategy: Flat
- Support: 101.36 (trend line)
- Resistance:102.84 (23.6% Fib exp.), 103.75-104.14 (Mar 7 high, 38.2% Fib exp.)
The Japanese Yen strengthened as expected against the US Dollar but a reversal may now be in the cards as USD/JPY shows a bullish Piercing Line candlestick pattern at rising trend line support set from early February. Initial resistance is at 102.84, the 23.6% Fibonacci expansion, with a break above that targeting the March 7 high at 103.75 and the 38.2% level at 104.14. Trend line support is now at 101.36.
While a long trade looks attractive on a purely technical basis, we will tactically opt to pass on the opportunity. Strong correlation between USD/JPY and US 10-year US Treasury yields (0.77 on 20-day percent-change studies) hints at sensitivity to today’s FOMC policy announcement. Subsequent volatility carries the risk of materially changing positioning. With that in mind, we will stand aside and allow event risk to pass before committing to a position.
Daily Chart - Created Using FXCM Marketscope 2.0
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.