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USD/JPY on the Move Again; Bullish Breakout

We were monitoring the USD/JPY yesterday as it consolidated between 118.20 and 119.40. This range formed after a previous bullish breakout rally earlier in the month when price went from 116.75 to 120.48. We noted that within the range consolidation, we still saw some bullish bias and favored the bullish breakout.

USD/JPY 4H Chart 2/24
(click to enlarge)

The 4H chart shows that indeed traders elected to break USD/JPY to the upside, which signals continuation of February's rally. That means the 120.48 level is in sight, with risk of breaking and allowing USD/JPY to run towards the 121.70, 2014-high.

Now, if price pulls back today and breaks below 118.75, the bullish breakout would be a false one, and the pressure will be on the 118.20 range low. A bullish market should keep USD/JPY above 119. 

While the 4H chart shows the breakout in the short-term context, the daily chart shows that this also suggests bullish continuation of the medium and long-term - of the uptrend in USD/JPY since 2012. 

USD/JPY Daily Chart 2/24
(click to enlarge)

Note that price has returned above the 50-day SMA and the daily RSI has held above 40 for the most part. We see the maintenance of the bullish bias and the price action to suggest continuation.

When we look at the monthly chart, we can see that above the 121.70 2014-high, there is still some room until USD/JPY hits the 2007 high at 124.16.

USD/JPY Monthly Chart 2/24
(click to enlarge) 

With BoJ far from concluding its stimulus mode, and the Fed looking to enter a rate hiking campaign starting in 2015, the USD/JPY does have the 124.16 high in sight, with potential of extending even higher if the central bank policies continue to be divergent.