USD/JPY Approaches Convergence of Trendlines

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USD/JPY Approaches Convergence of Trendlines

The USD/JPY broke the 2014-high of 121.70, but only barely before stalling at 122. It is consolidating now, so let’s take a look at the charts and get ready for the breakout.

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The USD/JPY is basically ranging between 120.60 and 122. There is a medium-term rising trendline and a short-term falling trendline, which are converging and price is approaching this crossroad.

The favored scenario is a break above 121.60, which would open up the 122 high with risk of breaking higher.

To the downside, because of the prevailing uptrend, it will take not only a break below the rising trendline, but also a break below 120.60 before introducing a price top in  USD/JPY. In this scenario, the bearish outlook should first be limited to the 119.50-119.85 support/resistance area. Below 119.50, the next support will be the mid-February lows in the 118.30-118.60 area.

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Fan Yang has been a professional forex trader and analyst since 2007. He specializes in technical analysis and has a Chartered Market Technician designation since 2011. He was the chief technical strategist at CMSFX He was also the founder and chief currency strategist at FXTimes Over the years, Fan has not only been a trader and analyst but also an educator. As a proponent of both technical and fundamental analysis in trading, Fan advocates simplicity and discipline as key factors in making trading decisions when faced with so many "clues" and "signals". Currently Fan Yang is the chief currency analyst and webinar instructor at forexminute.com.