USD/JPY Technical Analysis: Passing on Long Trade Setup
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- USD/JPY Technical Strategy: Flat
- Support: 108.40, 107.31, 106.50
- Resistance: 110.08, 110.76, 112.08
The US Dollar moved higher against the Japanese Yen as expected after prices put in a bullish Morning Star candlestick pattern. A daily close above the 109.70-110.08 area marked by the 50% Fibonacci expansion and the October 1 high exposes the 61.8% level at 110.76. Alternatively, a turn back below the 108.40-63 zone (October 2 close, 38.2% Fib) clears the way for a challenge of the 23.6% expansion at 107.31.
While entering long is a tempting proposition, we will tactically opt to stand aside. We are leery of on-coming risk aversion as traders react to looming Fed stimulus withdrawal following the relatively hawkish FOMC policy announcement. This may trigger JPY short-covering amid carry trade liquidation. As such, we will continue to stand aside.
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Daily Chart - Created Using FXCM Marketscope 2.0
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com