The USD/JPY has been bullish since the beginning of February, when it broke above a multi-month triangle consolidation. Let’s pick up the price action today as the market remains bullish.
After retreating from 120.48, the technical picture remains bullish in the 4H chart as price held above the 200-period SMA. This is call a slingshot signal for the upside. Also, the 4H RSI held above 40 after tagging above 70, reflecting development of bullish momentum.
The pair looks poised to test and break 120.48, which would open up the 121.70, 2014-high. The rally suggests the market is expecting a strong US NFP report, or at least an upward revision to January’s print because the ADP report showed a strong revision in that month.
At this point, USD/JPY should be bullish unless it fails to break 120.50 and falls back below 119. This would not open up a bearish outlook, but can suggest a period of consolidation in the short-term before the market determines whether USD/JPY is bullish again in the medium-term. We do see that the pair has been bullish in the long-term since bottoming in 2011.
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