USD/JPY Waving Hello to the 2007-High

0
108
USD/JPY Waving Hello to the 2007-High

The USD/JPY has been bullish in March, but stalled at 122 this week, after breaking the 121.70,  2014-high. The 1H chart below shows the pair in an ABC correction. Then, after tagging 120.65, around an earlier near-term consolidation support, price rebounded.

USD/JPY 1H Chart 3/13
usdjpy 1h chart 3/13
(click to enlarge)

From a fundamental standpoint, the bounce off that support coincided with the release of US data.

Retail Sales m/m (Feb) -0.6%
Forecast: 0.3%
Previous: -0.8%
Core Retail Sales m/m (Feb): -0.1%
Forecast: 0.6%
Previous: -1.1%
Jobless Claims (weekly): 289K
Forecast: 306K
Previous: 325K

The retail sales data was disappointing in a couple ways. First of all it missed forecasts of a rebound to positive reading. Even worse is that fact that this marks 3 straight months of negative prints for both the headline and core data. This is becoming a worrisome sign, so let’s make sure we pump the breaks a little bit on USD-strength, even though the prevailing bullish momentum can still push it further especially against the JPY. The jobless claims data was impressive, but this it should not really have that much an impact as the FOMC is going to be more focused on wage growth than simply employment numbers.

The fact the traders bought the USD/JPY after the disappointing retail sales data tells us the bullish momentum is still in play, but as I mentioned above, don’t get too excited.

A break above 121.50 could open up the 122.00 handle with risk of pushing higher, but around 124-124.16, we should anticipate resistance because it is the 2007-high as we can see in the monthly chart.

USD/JPY Monthly Chart
usdjpy monthly
(click to enlarge)

The monthly chart shows price waving hello that 2007-high. Note that the RSI is in overbought territory. While there has been a secular bull run since 2011/2012, the USD/JPY was bearish from 2007-2011. The moving averages reflect a non-bearish mode, and that adds weight to the 124-124.16 area as resistance.

So, let’s maintain a bullish outlook for now, but be prepared for some medium-term consolidation once price approaches the 2007-high.

Previous Post by Author: Australian Jobs Data; Aussie Reaction

SHARE
Previous articleCoinbase Joins the Internet Association, Becomes the First Bitcoin Company to Do So
Next articleDaily FX Trading Update: US Retail Sales Disappoint Due to Cold Weather – Mar 13, 2015
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.