- Bias: Bullish
- Point to Establish Long Exposure: Break / Close > 123.77 – 124.44 Zone
- Invalidation Level: Gap Open Low and Prior Resistance at 121.848
- Target 1: 125.85 (2015 High)
- Target 2: 127.00 Fibonacci Target based on trend progression from July 2014 low.
Both JPY USD are seen benefitting from the ‘No’ vote in Greece over the weekend. The benefit is mainly due to safe haven capital flows. On the open, a gap in favor of the JPY seemed to show risk-off sentiment would rule the day and maybe the week or longer. However, since the gap open, the USD seems to be favored over the JPY.
From a Fibonacci perspective, 61.8% of 118.89-125.86 & May hi/lows by 121.55 seem to be crucial pivots. Add to that, USD/JPY is near prior key levels as well as current technical significance of Ichimoku’s cloud & 20,2 Volatility Bands favors trend resumption as shown on the 2 charts below. Until equities really start to peel off the prior gains, JPY demand is unlikely to be sustainable.
From a volume perspective, the move into the support mentioned above hasn’t attracted much demand. When falling prices do not attract volume, the move is suspect and from a probability point of view, a corrective move that may soon resume the prior trend. In USD/JPY’s scenario, the trend is higher.
The Fundamental risk is the present fear that Fed tightening could be delayed due to rising global risk. This truth would be best seen via a widening of the two- and ten-year UST yield spread.