USDJPY - Let Battle Commence!

There's an battle going on between the bulls and the bears on this currency as we are reading completely different stories depending on which time frame you're looking at.

The ST & MT charts paint a pretty bullish picture which still has a valid target of 109.00 yet to be reached, formed from a breakout of a symmetrical chart pattern on the daily candle sticks close to the apex (See more from previous blog post on 10/12/13).  However if take a step back and look further out on the LT chart, we have a (potential) downtrend line being tested from the peaks in 1998 and 2007.  We have already satisfied the 38.2% retracement on this chart, which now brings the 50% level into play at 111.20.

I think the fundamental picture will most likely dictate the overall winner of this battle, with the Yen weakening further (i.e. the bulls wining) but thats not to say it will be straight forward.  We could be install for some increased volatility round these levels still to come.

If I didn't carry any position in this currency at this point in time, I would need some reassurance that this recent up move is not overdone for now and would like to see a break above the recent highs of 105.40 before buying into it.  I would also add that the 50Day SMA also appears to be working well on this chart when trending, so as long as it maintains with its upward move, any pullback/sell off back to this line could present good opportunities to buy dips in the market.

Charts sourced from ig.com