USD/JPY Keeps Positive Momentum
XM Group | Nov 18, 2014 03:35AM ET
The dollar was stable against the yen, as there were rumors that the Japanese Prime Minister could call early elections and announce a postponement to the sales tax hike as early as today.
Dollar / yen was trading around 116.64 and was relatively close to the 117.06 7-year high registered the previous day. Many analysts are waiting for further deterioration in the yen, as not only will the tax hike in all probability be delayed but also a fiscal stimulus could be announced as well.
USD/JPY has rallied strongly in November so far and has reached overbought levels as shown by the daily stochastic. However, the overall trend is bullish as prices have been making higher highs and higher lows since early 2012. Momentum on the daily is still positive as the RSI is in bullish territory. Also supporting the bullish market structure is that prices are above the Ichimoku cloud and the tenkan-sen and kijun-sen lines are positively aligned.
There is scope for the market to move higher towards the October 2007 peak of 117.93. Beyond this the June 2007 high at 124.12 comes into play.
Important support is seen at 110.08, the October 1st high. A fall below the October 15 low of 105.19 would damage bullish sentiment. This is an important level since it is the 61.8% Fibonacci retracement level of the downleg from the June 2007 high to the October 2011 low.
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