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Talking Points:
- USD/JPY Technical Strategy: Flat
- Support: 101.71-88 (23.6% Fib exp., trend line), 101.03 (38.2% Fib exp.)
- Resistance: 102.82 (Feb 21 high)
Prices are once again testing below supportat a rising trend line set from early October (now at 101.88), a barrier reinforced by the 23.6% Fibonacci expansion at 101.71. A break below the latter barrier initially exposes the 38.2% level at 101.03. Near-term resistance is at 102.82, the February 21 high.
Confirmation of a downside breakout requires a daily close below support, which remains absent for the time being. This suggests it is premature to enter short for now. On the other hand, a long position would require taking as given the still baseless assumption that support will hold. On balance, we will opt not to force the issue and wait for greater clarify before taking a trade.
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Daily Chart – Created Using FXCM Marketscope 2.0
— Written by Ilya Spivak, Currency Strategist for DailyFX.com