USD/JPY Technical Analysis: Channel Top Under Pressure

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Talking Points:

• USD/JPY Technical Strategy: Flat
• Support: 119.66, 118.93, 118.20
• Resistance: 120.04, 120.68, 121.41

The US Dollar recoiled from support below 119.00 against the Japanese Yen but the near-term down trend has managed to remain intact. Near-term resistance is at 119.66, the intersection of channel resistance and the 38.2% Fibonacci retracement, with a break above that on a daily closing basis exposing the 23.6% level at 120.56. Alternatively, a turn below the 50% Fib at 118.93 clears the way for a test of the 61.8% retracement at 118.20.

Risk/reward considerations argue against entering long with prices in close proximity to resistance. On the other hand, the absence of a defined bearish reversal signal suggests taking up the short 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