USD/JPY outlook: Bulls regain control after limited correction, eye multi-decade peak

Slobodan Drvenica Windsor Brokers

USD/JPY

Strong rise in early Monday trading is about to fully reverse last week’s 162.84/160.47 pullback, which marked a healthy correction (contained by Fibo 23.6% of 155.02/162.84 upleg) of larger uptrend.

Completion of reversal pattern on daily chart confirms scenario as traders entered fresh longs at better levels, encouraged by absence of real action from Japan’s authorities, although they kept expressing their readiness to intervene, almost daily.

The latest correction has improved technical picture, as daily studies returned to full bullish setup and opened space for fresh advance and possible retest of multi-decade peak at 162.84, hit last week and possible extension into the zone, last traded in 1986.

However, traders remain cautious on persisting intervention threats and await release of FOMC minutes (due on Wednesday) for more details about Fed’s stance on interest rates, following recent dovish steer from Fed Chair, as well as waning rate hike bets (especially after soft NFP) that may further overshadow bets for September rate hike.

Res: 162.84; 163.57; 164.24; 164.50.
Sup: 161.83; 161.24; 161.00; 160.47.

Author

Slobodan Drvenica

Windsor Brokers

Industry veteran with over 22 years’ experience, Slobodan Drvenica joined Windsor Brokers in 1995 when he was an active trader for more than 10 years, managing the trading desk and own account departments.

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