In the middle of this month, USD/JPY broke a multi-year high and 135.19, reached in January 2002, and today the pair continues to develop an upward momentum.
In our previous reviews, we assumed that the divergence in the monetary policy rates of the Fed and the Bank of Japan is likely to increase, creating prerequisites for further growth of USD/JPY. In this case, the pair will head towards multi-year highs near 135.00, reached in January 2002. Our forecast was fully justified, and the set targets (Buy Stop 125.50. Stop Loss 124.40. Take-Profit 125.65, 126.00, 127.00, 128.00, 134.00, 135.00) were achieved. Moreover, the price rewrote the multi-year high of 135.19 and hit a new all-time high of 136.70 last week.
USD/JPY is currently trading near 136.50, with potential for further gains. There is a strong upward momentum, fueled by increasing divergence in the direction of the monetary policies of the Fed and the Bank of Japan. The breakdown of the local high at 136.70 will be a signal to increase long positions.
In an alternative scenario, the signal for short-term sales will be a breakdown of the support level of 135.19 (local support level and 200 EMA on the 1-hour chart).
In this case, the downward correction may continue to the support level of 132.37 (200 EMA on the 4-hour chart) and even lower to the support level of 131.00 (local highs, 50 EMA and the lower line of the rising channel on the daily chart), where pending buy orders can be placed. A deeper decline is unlikely.
Volatility in the market and in USD/JPY quotes may sharply increase again today at 12:30 and 13:00 (GMT).
In the main scenario, we expect continued growth.
Support levels: 136.00, 135.19, 132.37, 131.00, 126.55, 124.20, 121.65
Resistance levels: 136.70, 137.00
Buy Stop 136.55. Stop Loss 135.70. Take-Profit 136.70, 137.00, 138.00, 139.00, 140.00
Sell Stop 135.70. Stop Loss 136.55. Take-Profit 135.19, 132.37, 131.00