Review and dynamics
Following the decision of the Bank of Japan to leave monetary policy unchanged, the pair USD/JPY fell by 2.6%, dropping by 300 points. In two days the pair fell by over 500 points, although since the beginning of this month the pair had grown.
On Monday Japanese Finance Minister Taro Aso said that the Bank was prepared to carry out intervention to the financial market, which caused rapid rise in the pair USD/JPY. The pair has approached important resistance level of 108.90 (ЕМА144 on 4-hour chart).
Judging by the dynamics in the pair and investors’ sentiments, the price can easily exceed this level.
The nearest targets of the rise in the pair will be the levels of 109.50 (ЕМА200 on 4-hour chart), 110.00 (upper limit of the ascending channel on 4-hour chart), 110.80 (ЕМА144 on the weekly chart, upper limit of the descending channel on the daily chart and Fibonacci 23.6% to the decline in the pair since June 2015 from the level of 125.65). Japanese exporters can start selling the pair after reaching the levels of 110.00, 110.80, which will prevent further rise in the pair.
On 4-hour and daily chart the indicators OsMA and Stochastic give signals to buy; on the weekly and monthly charts the indicators support sellers.
The pair is declining in the downward channel on the weekly chart with the lower limit at the level of 106.20, and on the daily chart with the lower limit at 105.00. Strong support level (ЕМА200 on the monthly chart) is located slightly below the level of 104.50.
If the pair USD/JPY does not reverse from the current levels and continues to decline, investors should be cautious when the pair approaches the levels of 105.00 and 104.50 as the Bank of Japan may carry out intervention on the currency market.
In case of breakout of the level of 110.80 the pair may continue to rise up to 113.65 (Fibonacci 38.2%) and 114.40 (ЕМА144 on the daily chart).
Support levels: 108.00, 107.45 and 106.20.
Resistance levels: 109.50, 110.00, 110.80, 112.00, 113.00, 113.65 and 114.40.
Buy on the market. Stop Loss: 108.30. Take-Profit: 109.50, 110.00, 110.80, 112.00, 113.00, 113.65 and 114.40.
Sell Stop: 107.90. Stop Loss: 108.30. Take-Profit: 107.45, 107.00, 106.70, 106.20, 105.00 and 104.50.
Resistance level of 108.90
In the downward channel