Forex Analysis: USD/JPY Weighed Down on Pullback

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2014-02-06-USDJPY

February 6, 2014 – USD/JPY (daily chart) has continued to be weighed down after hitting a 10-week low of 100.75 earlier this week. That low was preceded by a 4.4% decline from the currency pair’s 5-year high of 105.43, which was established in the very beginning of this year. This decline occurs within what continues to be, for the time being, a longer-term bullish trend extending back to the September 2012 lows near 77.00.

In making the 4.4% pullback thus far, USD/JPY has come close to reaching down towards its major support level at the 100.00 psychological level, which is also where the 200-day moving average currently resides as well as the 61.8% Fibonacci retracement of the last major bullish run.

With the non-farm payrolls report closely approaching on Friday, the pair should find a clearer directional path after its recent pullback. In the event of a downside extension of the pullback, major support continues to reside at the noted 100.00 level. Upside targets on a potential recovery and resumption of the underlying trend reside once again around 103.70 and then the noted 105.43 long-term high.

James Chen, CMT
Chief Technical Strategist
City Index Group

 

Forex trading involves a substantial risk of loss and is not suitable for all investors. This information is being provided only for general market commentary and does not constitute investment trading advice. These materials are not intended as an offer or solicitation with respect to the purchase or sale of any financial instrument and should not be used as the basis for any investment decision.

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About Author

James Chen is Chief Technical Strategist for City Index Group. He is also a Chartered Market Technician. He is the author of the books: "Essentials of Foreign Exchange Trading" (John Wiley & Sons, 2009) and "Essentials of Technical Analysis for Financial Markets" (John Wiley & Sons, 2010). Mr. Chen writes currency analysis, leads forex trading seminars and has appeared in numerous major financial media outlets, including CNBC, Bloomberg TV, Forbes, Reuters, Dow Jones, and the Associated Press.

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