USD/JPY Technical Analysis: Triangle Line Marks Key Support

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Talking Points:

• USD/JPY Technical Strategy: Flat
• Support: 118.18, 118.01, 116.17
• Resistance: 120.82, 121.91, 123.88

The US Dollar is retesting recently pierced resistance against the Japanese Yen having seemingly manufactured a breakout last week. A daily close below Triangle top resistance-turned-support is at 118.18 exposes the January 21 low at 117.17. Alternatively, a move above the December 23 high at 120.82 opens the door for a test of the 121.84-91 zone (December 8 high, 38.2% Fibonacci expansion).

Risk/reward considerations argue against entering short with prices in close proximity to support. On the other hand, the absence of a defined bullish reversal signal suggests taking up the long side is premature. We will remain flat for now, waiting for a more actionable opportunity to present itself.

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Daily Chart - Created Using FXCM Marketscope

--- Written by Ilya Spivak, Currency Strategist for DailyFX.com