By: Mike Kulej
The USD-JPY rallied in March from the all time low of 76.12 to 85.82. Within the most recent price history, this is the dominant swing, one defining critical support/resistance levels. Those must be broken before new trend gets under way.
Since early April, the price pulled back from the high, but remained well within the preceding up swing. The USD-JPY dropped to as low 79.56, which might prove important in the larger scheme of things. That happens to be a 62% Fibonacci retracement level, a very common place for reversals. In this case, that would mean a resumption of the uptrend.
While the price has been moving slowly up for a couple of weeks now, it is difficult to qualify this move as a legitimate rally. For that, the USD-JPY must climb above the 85.82 high. Until then, secondary resistance levels might be used to confirm the bullish strength. For example, the 100 SMA and the minor high of 82.80.
An area of concern, when assuming return of the uptrend, is the ATR. We would like to see increased reading, which would suggest strengthening trend, but so far, it remains flat. The USD-JPY is climbing for now, but not in a very convincing manner.