Now that USD/JPY has finally paused for breath after a tremendous late-year rally, don’t automatically assume we’re due for a reversal. Experienced traders know that trends, especially trends as strong as the one we’ve seen in USD/JPY in recent months rarely just reverse. Markets back and fill and often pull back just enough to get Mr. Market thinking a major reversal is underway before the dominant trend reasserts itself.
Given the frantic pace of the rally in recent weeks, techs are stretched. Hourly support comes in around 86.50 with support from the 10-day moving average now at 85.92. Those are areas where disciplined traders can consider entering longs.
