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.
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.
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.
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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