The Yen Sells Off, Whats Next?

USD/JPY (¥108.041)

• Resistance Levels: 108.60, 110.05, 110.80
• Support Levels: 107.30, 106.50, 105.20

The USD/JPY shot higher after the formation of a bullish reversal pattern called a Morning Star candlestick. See above daily MT 4 chart. We need a close above the technical resistance level at 108.60. If this happens the yen will continue to decline and challenge the congestion area marked at 109.65 to 110.05.

Should we see a reversal and dollar weakness, we need to move back below 107.30 to challenge the support at 106.50.

Looking at some trading strategy today, this was not an unexpected move. However, we are now moving through a heavy congestion area which could prove to be a challenge and eventually bring the USD/JPY lower. Right now we are very close to a resistance level. Due to this, and going by a risk to reward point of view, entering long trades is not very feasible. However, we do not see any bearish reversal signals. The outlook is flat till a better buy or sell opportunity presents itself.