Review and dynamics
At the end of last week the price has reached the lows of 2013-2014 at the level of 100.60. However, since the beginning of this week the pair has grown by 240 points.
The rise in the pair is supported by positive US labor market data for June, released last Friday and promises by Japanese Prime-Minister to introduce decisive stimulus measures to fight against deflation and prevent the rise in the Yen.
Although the pair remains in the descending channel on the daily and weekly charts, technical indicators give signals for long positions.
On 4 hour and daily charts the indicators OsMA and Stochastic give signals for long positions; on the weekly chart the indicators are also reversing towards the sell positions.
The price has reached resistance level of 103.60 (ЕМА144 on 4-hour chart). If the pair continues to rise, the price may reach resistance levels of 104.40 (ЕМА200 on 4-hour chart), 105.60 (ЕМА50 and the upper limit of the descending channel on the daily chart), 106.50 (Fibonacci 23.6% to the decline since June 2015 from the level of 125.65) and 107.60 (ЕМА200 on the weekly chart).
The rise in price above the level of 110.10 (ЕМА144 on daily and weekly charts, Fibonacci 38.2) can trigger further growth in the pair USD/JPY. However, fundamental factors show that investors tend to buy safe-havens asset amid ongoing instability in global financial markets, which will prevent significant rise in the pair USD/JPY. Even if the pair will grow in the short term, later it can return to the downtrend. A trader shall take into account this possibility when opening long positions on the pair USD/JPY.
Further movement direction in the pair will depend on actions and comments of the monetary authorities of the USA and Japan, investors’ risk appetite and optimism on the global markets.
Support levels: 102.80, 102.00, 101.50, 101.00, 100.60 and 100.00.
Resistance levels: 103.60, 104.40, 105.60, 106.50 and 107.60.
Buy Stop: 103.70. Stop Loss: 102.90. Take-Profit: 103.60, 104.40, 105.60, 106.50 and 107.60.
Sell Stop: 102.70. Stop Loss: 103.20. Take-Profit: 101.90, 101.30, 101.00, 100.50 and 100.00.
In the descending channel
Indicators give signals for long positions