Richard Perry
Independent Analyst
USD/JPY
The bulls ended a rather choppy session with mild gains last night to sustain the momentum of the near term technical rally. After Friday’s sharp technical rally it was important for the bulls not to just go into instant retreat once more. The Technically rebound continues to develop, with a Stochastics recovery (from a bull cross) and RSI into the mid-40s. Another mild positive open today keeps this move on track. However, the question is one of how the market now responds to the abundant overhead supply between 106.00/106.60 (but this could be extended further towards 107.00). We still believe that this is a near term reaction higher that will begin to struggle under the weight of selling pressure and we look for the next sell signal within this band of resistance. Faltering twice around 106.45 yesterday is interesting, and although the market is trading higher today, the hourly chart shows a moderation of recovery momentum. Decisive trading back under 106.00 would be a warning for the bulls, but support at 105.55 (yesterday’s low) could now become the key trigger for renewed selling. A closing breach would re-open the recent low of 104.17 once more.
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