USD/JPY Technical Analysis: Run into 20-yr Resistance May Pause the Rise
USD/JPY Technical Highlights:
- USD/JPY momentum has been impressive again is it came out of a correction
- The run may pause a bit here soon as a meaningful resistance level nears
USD/JPY has been the most impressive major currency pair this year, with it having historically sharp moves. The correction during May gave the trend the breather it needed to put together another run. This run, however, may be cut short shortly as it becomes extended and resistance stands in the way.
We have to pull out the monthly chart to find levels at this juncture. The 2002 high at 135.16, a high that has held since, is up next as a major level to get tested. Given where we are in the trend it could play a factor in how things play out in the near-term even if the broader trend is to persist.
Watch how price action plays out on the daily chart as the level comes into focus. Volatility around the level may suggest it will lead to a pullback, or sideways correction at the least. It won’t perhaps lead to a great shorting opportunity, but could warn longs to tighten up trailing stops.
There may be a short in there, but it’s too soon to say without seeing developments around resistance. A blow through and reverse would be a good start for indicating that the long-term level is going to matter, but it could take a few days or longer before we really know given how long-term the level is.
For now, continuing to respect the momentum. We may not even see a hesitation as crazy becomes crazier. We are in that area now where we can’t rule out even larger upside moves as we probe two-decade highs.
But risk of being long has certainly grown, with fresh longs holding no appeal even if we do see a further burst to the upside. A pullback to the recent highs to around 131.47, though, may be appealing for a long entry.
USD/JPY Monthly Chart
USD/JPY Daily Chart
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---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.