USD/JPY (daily chart) has continued its bullish bias into 2013 after having spent the last three months in a steep, stair-step ascent that broke out above many key resistance levels. After its breakout above 82.80 in mid-December, the pair went on to rise above 84.00 and then 85.50 in late December before pushing even further to hit a high well above 87.00 on the first trading day of 2013, establishing a 29-month high in the process. Although price has pulled back today, and further bearish retracements could potentially be forthcoming, the trend momentum has been steeply and consistently bullish. With key potential resistance to the upside around the 88.00 level, which was last valid throughout 2010, a breakout above that level could move higher towards the psychologically important 90.00 level. A bearish correction on the current bullish over-extension could find strong potential support once again around the 85.50 level.
James Chen, CMT
Chief Technical Strategist
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