USD/JPY Technical Analysis: Candle Setup Hints at Pullback

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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 may pull back against the Japanese Yen after prices put in a bearish Dark Cloud Cover candlestick pattern. Near-term support is at 119.66, the 38.2% Fibonacci retracement, with a break below that on a daily closing basis exposing the 50% level at 118.93. Alternatively, push above the 38.2% Fib expansion at 120.68 clears the way for a test of the 50% threshold at 121.41.

While entering short is a tempting proposition, we will tactically opt to stand aside for now. Prices appear to have resumed a long-standing rising trend with the completion of a Flag chart formation, warning that any on-coming weakness may be corrective. With that, we will stand aside for now and look for the pullback to yield a buying opportunity.

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Daily Chart - Created Using FXCM Marketscope

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