That pretty much sums it up for USD/JPY. If you take a look at the daily chart you will see a lovely little downward sloping channel developing off the lower highs we have seen since back in early March and unless we can break back above 98.50/60 then we should be headed back towards the 50 and 100 DMA around the 94.00 level. Obviously stops on shorts should remain somewhere above 98.70.
It is also worth taking the time to look at the weekly USD/JPY chart that i have included to get an idea of the bigger picture which also indicates the significance of the current 98.50/00 region. The first thing you will notice is that the top of the channel we identified on the daily chart also happens to extend all the way back to the highs seen in July 2008 when you look at the weekly. On top of that you have the weekly technical studies all overbought and threatening to head lower.
Being short USD/JPY above 98.00 may not be as silly as it looks when you take a step back and look at the bigger picture.
