USD/JPY Technical Analysis: Three-Year Trend in the Balance (25/08/15)
The US Dollar recorded the largest one-day loss since May 2010 against the Japanese Yen, overturning the rising trend in play since the beginning of the year. Prices spiked down to within a hair of year-to-date lows near the 116.00 figure, erasing nearly five months of gains in just four days.
Perhaps most interestingly, this puts USDJPY within striking distance of trend support guiding the pair higher for close to three years. The line in the sand seems to come in around the 114.00 figure, with prices’ behavior at this barrier shaping up to be decisive for direction for months to come.
An actionable trade setup is absent for now as seesaw volatility continues to generate erratic about-face swings intraday. The dominant bias continues to favor the upside while multi-year trend support remains intact but trying to pick a bottom or assuming the pair will necessarily test 114.00 and chasing prices lower seem equally ill-advised. We will remain flat until greater clarity emerges.