The USD/JPY is pretty much at a crossroads at the moment. As i see it, it has two options:
- It holds above 97.65 and rallies back to 101.50 – 97.65 is the bull channel support dating back to the Jan lows, it is also close enough to where the 100 DMA comes in and has held on the past couple of attempts.
- It breaks below 97.65 and falls to 94.00 – The hourly picture doesn’t look good and has that about to fall off a cliff feeling, a break below 97.65 also breaks the base of the bull channel mentioned above and shorter term moving averages are supportive of a move lower. The weekly tech studies have all turned down from overbought levels, reducing the likelihood of a sustained new high.
As you can see there are good arguments for both moves so the best thing to do is to buy smalls at 98.00 with a stop and reverse below 97.50. I would also be adding a little more to my position size if we head below 97.50 as the break of the bull channel is pretty significant in my eyes.
