USD/JPY: the big caveat with a break above 109.70 [Video]
|USD/JPY
Another decisive bull candle has the yen bulls under pressure again as USD/JPY has continued to climb strongly higher. With mild early gains once more today, the market is eyeing a test of the key 109.70 resistance area of the old December highs. On a medium term basis we have seen more of a range configuration forming in recent weeks, but the strength of the candles and the move higher now threatens this. Momentum indicators have upside potential with the RSI tending to run towards 65 in the bull legs of the past few months. Also, the Stochastics continue to accelerate higher and the MACD lines are ready to bull cross. The conditions are set for an upside test. However, the big caveat with a break above 109.70 is that time and again the breakouts in recent months have struggled in the subsequent sessions before a retracement has set in. Given how the dollar has struggled for sustained strength in recent months, we would see this happening again. The hourly chart shows a band of support 109.00/109.20 initially.
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