USD/JPY: Uptrend to resume - Westpac

Tim Riddell, Research Analyst at Westpac, suggests that the sharp upturn in daily momentum of USD/JPY pair that has accompanied the gap back above 109.40 implies a rejection of the slide below 109.00.

Key Quotes

“Risk of closing the 109.40-60 gap should not be ignored, but price action suggests an early surge into the 112.15 to 114.65 retracement zone during May.”

“Weekly

• Although weekly momentum shows signs of turning, it is yet to move as decisively as price action. Together they could signal a return to the uptrend of late 2016
• Even if the slide from 118.65-108.15 was the first part of a broader consolidation, a sharp move through this range should develop into mid-2017”

“Monthly

• Rejection of levels below 109.00 suggest that correction of the uptrend from mid- 2016’s lows may have completed
• Monthly momentum has remained supportive throughout. Potential for a full retest of 125-126 remains (could even extend towards 135-140 area)”