On a longer term basis i am still bearish on the USD/JPY and a quick look at the weekly chart should give you an idea why. To me, all of the technical studies have turned down from overbought levels, we have failed to consolidate above the 50 week MA and remain within the downward sloping channel that has been in play since mid July 2008. The daily was looking somewhat overbought and has now worked off this condition since working its way lower from the 101.50 high we saw back in early April which makes me think we are open to another bounce before the dominance of the bearish weekly picture kicks in.
It is also worth noting on the daily that the 5 DMA has now crossed below the 15 DMA which is a usually a sign of lower levels to come. Last time this occured back on March 17th the USD/JPY fell 600 points!!
What do we do with this information? I would suggest looking to sell USD/JPY at 100.70 and 101.30 with a stop above 102.00. Initially the USD/JPY should find good support at the 97.00 level which is horizontal, channel and 100 DMA support and below this level we target 94.00.
