USD/JPY Technical Analysis:Further Gains Hinted Ahead

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Talking Points:

• USD/JPY Technical Strategy: Flat
• Support: 119.66, 118.93, 118.20
• Resistance: 120.68, 121.41, 122.13

The US Dollar looks poised to extend upward against the Japanese Yen after prices broke the top of a Flag chart pattern. Near-term resistance is at 120.68, the 38.2% Fibonacci expansion, with a break above that on a daily closing basis exposing the 50% level at 121.41. Alternatively, a turn below 119.66 (38.2% Fib retracement, Flag resistance-turned-support) clears the way for a test of the 50% retracement at 118.93.

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