USD/JPY

Long-term bias favors bulls

Recent trading has seen USDJPY breach the bullish trend line that had guided the pair since mid-March. Last week, the pair appeared to have found near-term support above multiple support/resistance at 105.52. USDJPY tried lower with a close below this level, but a handful of upside surprises on the Earnings calendar saw dollar bulls return price action above the 106.00 level.

Looking ahead, the insights to be had from the daily chart seem to offer little by way of a directional signal. We will take this opportunity to take a step back and re-evaluate the longer-term picture. The weekly chart suggests a downward-sloping resistance line that guided prices since June 2007 was decidedly penetrated with a Long White Candle about a month ago. Price action looks to have remained indecisive since then, consolidating above support near 105.70. While last week’s candle formed a Hammer, we see this insufficient to go long at current levels. The pair produced a similar setup two weeks ago with no follow-through. We will remain on the sidelines for the time being, though the long-term setup favors a bullish bias.

USD/JPY Strategy