USD/JPY (daily chart) has corrected back down to the important 88.00 support region after having hit a 30-month high at 90.23 on Monday. This correction follows another pullback to 88.00 that occurred a week ago. These minor pullbacks have taken place within the context of an exceptionally strong uptrend that had its beginnings around the 77.00 level in mid-September 2012, and which accelerated significantly in mid-November.
Since then, the pair has taken a steep stair-step ascent that has broken out above successive resistance levels, finally moving towards the key 90.00 level. After correcting back to 88.00 support from 90.00, price could correct further on any significant breakdown below 88.00, with further potential support to the downside around the 85.50 level. To the upside, 90.00 remains the major potential resistance level to watch within the still-intact bullish trend. In the event of another breakout and daily close above 90.00, confirming a continuation of the uptrend, price could move towards further potential resistance to the upside around the 92.00 and then 95.00 levels.
James Chen, CMT
Chief Technical Strategist
FX Solutions
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