USD/JPY fractal outlook

[Paul Koszarny]

USD/JPY fractal outlook

The daily pattern shows initial bullish impulse from a low 115.09 on May 19 till 117.77 on May 22 which went through a typical correction (61.8%) of the first wave and subsequently bounced off to new highs slightly over 119.00. Last Thursday USD/JPY retraced 50% of the move 115.09-119.62 and an upward pressure resumed following rumors of BOJ intervention. On daily charts the upper boundary of a slanting channel line currently at about 119.75 has not been tested yet. The local reversal is supported well from Friday’s low 117.61. The support line is drawn from May’s low and so far is intact. Gained momentum comes from strong bullish divergence of the price versus stochastics (21,3,3) on May 19. At the recent top 119.62 another divergence occurred (bearish) and this time it propelled a selloff which subsided on approach to 50% of the upward movement. Now concentrating on the recent developments (short-term picture) further dollar gains against the yen should be expected targeting levels in the region of 120.26. Monday’s initial support comes at 118.41, first resistance at 119.23. Major support of the current upward trend is at 117.00-117.29. Longs opened on Thursday at 117.50 will probably be closing on a break below 118.41 but may be reestablished at 117.60.