USD/JPY Technical Analysis: Opting to Pass on Long Trade

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Talking Points:

• USD/JPY Technical Strategy: Flat
• Support: 118.15, 118.01, 116.17
• Resistance: 120.82, 121.91, 123.88

The US Dollar may be preparing to renew its push higher against the Japanese Yen after retesting a recently broken Triangle pattern top. Near-term resistance is at 120.82, the December 23 high, with a break above that on a daily closing basis exposing the 121.84-91 area (December 8 high, 38.2% Fibonacci expansion). Alternatively, a reversal below Triangle resistance-turned-support at 118.15 clears the way for a challenge ofthe January 21 low at 117.17.

While entering long seems compelling from a purely technical perspective, we will tactically opt to stand aside. USDJPY is highly sensitive to risk sentiment trends, making the pair vulnerable to volatility shocks amid continued uncertainty surrounding the Greek debt impasse. With that in mind, we will stand aside for now.

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Daily Chart - Created Using FXCM Marketscope

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