Talking Points
- Testing key resistance zone
- Cyclical picture turning more positive
Unfamiliar with Gann Square Root Relationships? Learn more about them HERE.
Trading in USD/JPY has been frustrating (to say the least) over the past few months as the rate has been locked in a contracting range above 100.75. The cyclical outlook of the exchange rate, however, suggests that this regime could be about to change as several important relationships converged around the time of the month-to-date low at 101.05. Admittedly momentum has been lacking since that low, but the rate has begun to show some signs of life over the past few sessions with a break above a couple of key Gann lines in the 101.80 area (see chart below). A daily close above this level will be a strong first step, but the month-to-date high at 102.25 really needs to be overcome to signal to us that something more important is indeed developing on the upside. Any weakness back under 101.05 would invalidate this burgeoning positive view.
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USD/JPY Daily Chart: July 25, 2014
Charts Created using Marketscope – Prepared by Kristian Kerr
Key Event Risk in the Sessions Ahead:
LEVELS TO WATCH
Resistance: 102.00 (Psychological), 102.25 (MTD high)
Support: 101.35 (Gann), 101.05 (MTD low)
Strategy: Buy USD/JPY
Entry: More aggressive traders can look to buy on a daily close above 101.80, while more cautious traders can wait for a move through 102.25 to position.
Stop: 1-day close below 101.05
Target: Open
--- Written by Kristian Kerr, Senior Currency Strategist for DailyFX.com
To contact Kristian, e-mail kkerr@fxcm.com. Follow me on Twitter at@KKerrFX.
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