USD/JPY Trading at Highs Not Seen Since 2007

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USD/JPY Trading at Highs Not Seen Since 2007

The USD/JPY has revived its uptrend after a multi-month consolidation. Starting with the daily chart, we can see that the pair has been consolidating since December between roughly 122 and 115.56. As we get into the 5/26 US session, usd-yen has broken the 122 high and is trading around 123, a high not seen since 2007.

USD/JPY Daily Chart
usdjpy daily chart 5/26
(click to enlarge)

Note how price has been oscillating above and below the 100-, and 50-day simple moving averages (SMAs) while the daily RSI has been stuck between 40 and 60. These conditions reflect a neutral market, but all that has changed coming into this week

Now, if there is a pullback, we should see support at or above 120. The fact that the consolidation has lasted about 6 months suggests that this breakout will be sharp, and we might not see a pullback towards 123.

USD/JPY Weekly Chart 5/26
usdjpy weekly chart 5/26
(click to enlarge)

The uptrend since 2012 looks intact in the weekly chart as price remains above all of the 200- 100-, and 50-week SMAs and as the RSI held above 40, even 50.  Now, the width of our 6-month consolidation can be rounded to 600 pips. (122-116). This means, the bullish breakout has opened up a target of 128 (122+600 pips). Let’s take a look at the monthly chart to see where our next resistance levels are.

USD/JPY Monthly Chart 5/26
usdjpy monthly chart 5/26

(click to enlarge)

The monthly chart shows a market that has reversed a long-term bearish market into a bullish one since 2012. Price is above the moving averages and the RSI has pushed above 70 even above 80. We can see that the immediate, near-term upside risk is to the 207 high at 124.16. Above that, USD/JPY would be trading at 13-year highs. There are some common resistance in the 125.60-126.60 area.

Then, we talked about the 128 target. Don’t be surprised that by this time next year, we will be talking about the 130 psychological level as well as the 2001-2002 high around 135-135.16.

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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.