USD/JPY Starts the Week with a Bearish Breakout

USD/JPY Starts the Week with a Bearish Breakout

Last week we saw USD/JPY dip and stay below the 102 handle, a level the market has been whipping above and below throughout the year. This latest bearish attempt followed a sharp downward revision in US Q1 GDP. With Q2 data underwhelming so far, the market is pushing back interest rate hike expectations for the FOMC. This is an soft-USD environment.
usdjpy 6/29/2014
(usdjpy 1H chart, 6/30)
The USD/JPY ended last week in a consolidation. After a failed bullish attempt on Friday, it is starting this week with a similar failed attempt but this time followed by a stronger bearish push. The price action in the 1H chart shows that bears are in charge at least within the intra-session time-frame. The 100.76-100.85 low on the year and May low are likely going to be tested this week with the US NFP data looming on Thursday.

A break above 101.50 would reflect consolidation this week. However at least a break above 102 will be needed to convince traders to go against last week bearish shift. This basically puts USD/JPY back into a consolidation mode that has kept USD/JPY roughly between 101 and 104 since Feb. this year.
usdjpy 6/30 daily chart
(usdjpy daily chart, 6/30)

It should be noted that last week Friday’s bearish candle closed below the 200-day SMA, the first time since Nov. 2012. Don’t be surprised if the market needs to test it a few times before another leg down below that 2014-low, which would first expose the psychological level of 100.

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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