USDJPY Breakout Testing Initial Resistance Ahead of U.S. GDP

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Talking Points

• USDJPY breakout coming into first zone of resistance / 2007 highs

• Updated targets & invalidation levels heading into June trade

• Event Risk on TapThis Week

USD/JPY Daily

USDJPY Breakout Testing Initial Resistance Ahead of U.S. GDP

Chart Created Using FXCM Marketscope 2.0

Technical Outlook

• USDJPY testing key near-term resistance confluence 1.2413/35

• Breach targets objectives at 125.62/70 backed by ML resistance (~126.40) & 128.12/18

• Interim support with the May TL backed by 121.83-122- bullish invalidation

• Daily RSI in overbought- Constructive while this condition holds

• Event Risk Ahead: Japan Jobless Rate, CPI & Industrial Production tonight & U.S. 1Q GDP on Friday

USD/JPY 30min

USDJPY Breakout Testing Initial Resistance Ahead of U.S. GDP

Notes:USDJPY has been trading within the confines of a well-defined median-line formation with today’s rally stretching into the first level of significant resistance at 124.13/35. This zone is defined by the 2007 high, the 1.618% extension of the advance off the December low, near-term MLP resistance & a slope line extending off the January 2015 high (daily chart).

Intra-week divergence into the highs leaves the pair vulnerable for a pullback below this threshold with a break below the highlighted region into 123.53 shifting the near-term focus towards the lower MLP / 122.97. The broader bias remains constructive while above the 122-handle.

Bottom line: We’ll be looking for either a break above 124.35 or a break below this formation for guidance heading into June trade with the broader bias weighted to the topside above 122. A topside break keeps the long bias in play targeting 125 backed by 125.67/70. The average true range is rather tight here so to accommodate the near-term breakout we’ll look for a larger portion of the range with a third of the daily ATR yielding profit targets of 26-29 pips per scalp. Caution is warranted heading into U.S. event risk tomorrow morning with end of week/month flows also likely to fuel added volatility in USD crosses.

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Relevant Data Releases

USDJPY Breakout Testing Initial Resistance Ahead of U.S. GDP

Other Setups in Play:

• AUDUSD Testing Key Support- Short Scalps Vulnerable Above 7680

• USDCAD Scalps Faces 1.25 Key Resistance Ahead of BoC, GDP

• GBPUSD Longs Favored Above 1.5540- Scalps Target May Highs

• EURCAD Pullback Stalls at Support- Sub 1.3538 to Negate Bullish Bias

• Scalp Webinar: USD At Risk For Bearish Invalidation- 11,737 In Focus

• NZDJPY Rebound Testing Resistance- Scalps Target 89.50 Inflection Zone

---Written by Michael Boutros, Currency Strategist with DailyFX

Follow Michaelon Twitter @MBForex,contact him at mboutros@dailyfx.com or Click Here to be added to his email distribution list

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