After topping at 80.00 a couple of weeks ago, USD/JPY has been falling like a rock. On its downtrend, the pair has retested its trend line a number of times. How far will it go?
The current risk aversion present in the marketplace has played well for the yen, as it has gained considerably against its major counterparts across the board. Yesterday, Japan released its trade balance figures, which posted a deficit of just 300 billion JPY last month. This slightly better-than-expected report was less than half the 620 billion JPY deficit realized last month.
Technical analysis on the USD/JPY reveals it is trading on a downtrend. If the pair continues with its downward move, it may encounter support at 77.70 before moving lower. On the flipside, if the pair starts receding to the upside and closes convincingly above the trend line, it may encounter resistance at 78.60 before moving higher.
The pair is on a downtrend. Therefore, traders who were short in it should continue holding on to their positions as long as the bearish pressure is still evident. Otherwise, they should be wary of any bullish price corrections and interventions from the Bank of Japan (BoJ).
DISCLOSURE & DISCLAIMER: THE ABOVE IS FOR INFORMATIONAL PURPOSES ONLY AND NOT TO BE CONSTRUED AS SPECIFIC TRADING ADVICE. RESPONSIBILITY FOR TRADE DECISIONS IS SOLELY WITH THE READER.