DominikStone

A closing breakout above 110.00 on a strong bull candle.

FX:USDJPY   U.S. Dollar / Japanese Yen
A closing breakout above 110.00 on a strong bull candle is certainly a positive signal on USD/JPY             . This continues the recovery trend on the dollar and shows that consolidations continue to be bought into. Momentum indicators are ticking higher, although perhaps there is a less effusive response than maybe could have been seen, however there is still further upside potential within this move. The initial resistance of the February high of 110.47 has just limited the move higher initially, but the bulls will be looking to take out this resistance which would help to further break the shackles. This would then open the next resistance between 111.50/112.00. The Daily chart shows strong momentum and that intraday weakness is a chance to buy. There is breakout support now 109.80/110.00 as an initial buffer to the downside, with 109.15 now a higher low above the key reaction low at 108.60.
Comment: The strength of the trend higher continues to pull the market through overhead resistance as the pair pulled above 110.47 yesterday to break the February high. The breakout from the consolidation band 108.60/110.00 implies 140 pips of upside and a push towards the next resistance at 111.50 and the run of positive candles suggests that the bulls remain in control for this move. Although on an historic basis Dollar/Yen tends to be a pair that trends strongly, perhaps the one caveat with the continued push higher is that the RSI is now above 70 and at a 12 month high. Can it sustain constant buying pressure? The bulls will point out that intraday corrections remain a chance to buy, with the trend support now in a confluence of support around 110.00 which is also where the latest breakout support is. The daily chart shows the potential for an initial slip back today, however with the strong configuration of momentum, weakness is a chance to buy which could help to renew upside potential. Initial resistance is at 111.00 this morning but a move towards 111.50/112.00 should not be ruled out.
Comment: One more the bulls have coming into the new week with a spring in their step, as the market makes further strong gains. The breakout above 110.47 took a pause for thought on Friday with the marginal uncertainty that comes with a doji candle, however any sense of impending consolidation has been dispelled again today. The bulls are pushing on with the uptrend, which comes in today at 110.10. Momentum indicators remain positively configured and the RSI is now pushing into the mid-70s, which is the strongest since December 2016, a time during which the market added over 15 big figures in just over a month. We are not in that sort of territory yet, but it just helps to show that when Dollar/Yen trends, it really can move. The next resistance is at 111.50 and there is a band of resistance 111.50/112.00. The daily chart shows the market is perhaps a touch stretched this morning coming into the European session, whilst any unwinding move is a chance to buy. There is a good band of support building 110.60/111.00 now.
Comment: Dollar/Yen continues to move higher within its eight week uptrend whereby corrections are seen as a chance to buy. The market just shied away from a test of the resistance around 111.50 yesterday however still formed a positive candle and there is as yet little to suggest that the run higher is set to end. Near term consolidations have been seen along the uptrend which currently comes in around 110.25 so there is room for a near term pause for breath. Momentum indicators have been strongly configured for several weeks during the trend, with the RSI holding up above 60. Old breakouts have been seen as an area of underlying demand and a basis of support to work from, so currently the bulls will be looking around 110.50. The Daily chart shows that this slip of 60 pips has unwound momentum and should now be around where the bulls look to regroup, so today’s session will be an interesting gauge of the near term outlook.
Comment: The eight week uptrend is again being tested. This sort of situation has been seen on several occasions during the run higher, but an early move lower has today has now seen the market drop back around 100 pips from the recent high of 111.40 right back to the uptrend which comes in around 110.40 today. Old breakouts are supportive and there is a run of higher lows in place that means underlying demand is in place to help bolster support. The first reaction low is at 110.00 and it will be interesting to see how strong this uptrend proves to be now. The hourly chart shows how this is an important test for the bulls now, with hourly momentum indicators creaking and threatening to turn more corrective. There is now a band of near term resistance between 110.80/111.20. Below 111.00 is the old key breakout support at 110.47.
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