By: Mike Kulej
The Japanese Yen has been grabbing the headlines lately. Main reason – the long threatened intervention by the Bank of Japan. It targeted the 15-year low in USD/JPY, which, at that time, was at 83.00. This action managed to push the rate to 85.90 in a short order.
Since then the price fell back to 84.30, or about half of the original rally. On the intermediate term chart, this level presents a strong support. First is provided by the major down trendline, which, once broken, turned from resistance into support. In addition, the 50% Fibonacci retracement level is also here, as well as the 100 SMA. If these multiple supports are broken, this pair is very likely to retest the lows.
On the other hand, should the market rally from here, one could expect it to reach 85.90. It has become the main resistance, which must be broken if the uptrend is to be confirmed. The USD/JPY moved above the main trendline, which is a first sign of a possible trend change. Now a move above the latest high is needed.
Another intervention by the BoJ is possible, but since it is never announced when, or at what level, it is unpredictable. One should consider this when trading the USD/JPY.
USD/JPY At Intermediate Term Support
DailyForex.com