For the second week in a row the USD/JPY Weekly chart printed a hammer style candle with long tails testing the waters below 78.50 but failing to close below the open and resulting in slightly bullish candles for each week. With strong support for the pair at 78.10, below which the pair spent most of the latter half of 2011, this is possible foreshadowing of higher prices to come. However, there is also a bevvy of support above the current price level with the Monthly Pivot at 78.72, and Weekly R1 at 78.95. If the Bulls are going to take over, they will need to build some steam up before attempting to break last week's high again. Price action during Asian trading today has been Bearish, but the bears were stopped at 78.33 with 3 hours left in Tokyo trading and Australian markets closing. If the Bulls fail and prices drop, the break of last weeks low will be significant, but there is allot of 'traffic' between 78.10 & 78.50 that will make any descent difficult. Speaking strictly based on the charts, it is more likely that we will see the Bulls prevail. Intraday traders will be interested in Daily Support levels at 78.16, 77.62 77.46 which is just below the Weekly S2 at 77.57. Daily resistance can be seen above the Monthly Pivot at 78.86, 79.16, and the Daily R3 sits just above the Monthly R1 at 79.55.
I am Bullish on the USD/JPY, but cautiously so until we get confirmation from price action.
Happy Trading!