Consolidation within Consolidation: After a bullish breakout swing from 116.75 to 120.48, USD/JPY has retreated towards the middle of this price range and has been consolidating in a smaller range roughly between 118.20 and 119.40.
Bullish Bias: The 4H chart shows that during this consolidation, price was able to hold above the 200-period SMA, which showed that the market was keeping at least a slight bullish bias in the short-term. The 4H RSI also held above 40 throughout the consolidation, which reflects maintenance of the bullish momentum.
Breakout: Indeed the market kept these bullish biases and is starting the 2/24 US session with a bullish breakout from this range. This breakout opens up the 120.48 high, but also signals bullish continuation of February’s rally with the 2014-high of 121.70 in sight.
Pullback Support: At this point, if there is a pullback, a bullish market should be able to keep USD/JPY above 119.00. If the current bullish breakout is a false one, a break below 118.75 (today’s low) would be an indication.
Broken Triangle: Now, when we look at the daily chart we can see that the February rally from 116.75 was indeed a breakout rally because it broke a triangle resistance. Note that price also returned above the 50-day SMA, which recaptures the bullish bias based on moving price action relative to moving averages. The RSI was also able to hold above 40 for the most part, and thus reflects maintenance of the bullish momentum.
Bullish Signals: While the 4H picture a bullish continuation of February’s rally, the daily picture shows bullish continuation of a trend that started in 2012.
Head Room: Jumping to the monthly chart to capture the secular trend, we can see that price bottomed at historic lows in 2011 and started to take off in 2012. In 2015, USD/JPY has a prevailing uptrend that looks poised to push price towards the highs in 2005-2007. It has already entered that range in 2014, when price hit 121.70, but there is still some room towards 124.16 before we hit a high of more than 12-years.
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