A build-up on the USD-JPY recovery is now underway, with 85.92 the target level, its Sept. 21, 2010 high.
This is coming on the back of a break and hold above the 83.97 level the past week. However, the 85.92 level is expected to present a considerable resistance on an initial test thus turning pair back lower. Conversely, if that fails to occur and a break above that level is seen, we should expect further strength towards its 50 ema at 87.54.
Daily studies of the pair are bullish, pointing higher supporting this view. Conversely, with the pair's broader long-term bias still pointing lower, we envisage its current recovery to be limited within its established falling channel.
Downside risks are seen at the 83.97 level ahead of the 82.38 level followed by its major support standing at its 1995 low at 79.75. An eventual break will resume its long-term bearishness towards 78.00 level.
All in all, USD-JPY faces the risk of further recovery higher.
Mohammed Isah is a technical strategist and head of research at FXTechstrategy.com, a technical-research Web site. He has been trading and analyzing the foreign exchange market for the past seven years. He formerly traded stocks before crossing over to the forex market, where he worked for FXInstructor LLC as a technical analyst and head of research before joining FXTechstrategy.com. He has written extensively on the forex market and technical analysis and his articles have been featured in The Technical Analyst Magazine, The Forex Journal Magazine, The International Business Times and FXstreet.com. At FXTechstrategy.com, he writes daily, weekly and long-term technical commentaries on currencies and commodities, which are offered to its clients. He also produces
for his subscribers. He provides full coverage of the forex market with specific focus on G10 currencies as well as the commodities markets, with focus on five key commodities.