Is USD/JPY poised to break higher?
After being stuck in a sequence of lower highs over the past four years, traders are watching to see if USD/JPY can break higher.
The US dollar was once worth ¥125.00. That was back in mid-2015, when the Fed was beginning its tightening cycle. It proved to be the peak for USD/JPY for the next few years. In the following 12 months, the currency pair fell to ¥100.00. While it has had periods of sustained recovery since then, the overall trend has been lower, with lower highs in December 2016, November 2017, October 2018, April 2019 and, potentially, January 2020.
Is change in the offing?
But perhaps things are about to change. Over the past few weeks the price has stabilised above ¥108.00, and seems poised to challenge trendline resistance once again. A rally above ¥110.00, the peak from January, would mark a long-term bullish development, and suggest that, in the near-term at least, a rally to ¥114.00 and the resistance zone from 2017-2018 was now in play.
If nothing else, the price has shown, since early 2018, a distinct unwillingness to move below ¥104.80. The price has held support three times at this level, and crucially the last bounce from here also coincided with a bounce from trendline support, as a rising trendline from the June 2016 low came into play. If ¥104.80 is broken, then a more bearish view develops, with the 2016 lows at ¥100.00 the next big levels to look out for.
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