[MownySue]

• USD-JPY double bottom is unfolding, targeting 110.01 further out

• Short-term momentum indicators are mixed, suggesting consolidation

• Technically, we should stay long and add on any dips ahead of 99.60

Technical Analysis

Daily Chart
USD-JPY continues to trend higher with the turn above 100 helping to confirm the basing pattern. The double-bottom reversal (confirmed by the move above 94.60) set up 102+ targets on a simple extension measure. The larger basing pattern that is unfolding targets 110+ on the view that this is a very choppy inverse head and shoulders pattern unfolding. Support is building at the 99.60 level now, which marks the neckline. Current spot activity is showing the 250-day moving average (MA) coming under pressure at 100.38, with the 20-day MA at 97.97 rising above the 60-day MA at 94.35. The cross-over between the 20-day and 60-day MAs is bullish, as are the rising daily momentum indicators.

Weekly
The weekly USD-JPY chart is bullish as the USD is finding support from a rising 50-week momentum oscillator. The turn in the spot rate above the 13-week MA and current pressure on the 50-week MA is also bullish. Watch the 103 falling trend-line (and congestive highs) resistance now, as failure to break above this line in the near term would temper the bullish outlook. Pullbacks should hold 99.60 (neckline) and then 96 (pullback low/last shoulder) in order to keep the focus on the upside. However, the focus is still on for a move to 110.01 on this basing pattern. This level also marks the 61.8% Fibonacci retracement of the fall from 124.16 to Y87.11 and swing targets above this come in at 112 to 113.

Strategy – Three-Month View
USD-JPY is expected to continue to trend higher over the coming three months. This should target 110, with some potential for 112/113. Technically, stay long USD-JPY and add if any dips come up short of important support at 99.60.