Retreat from Highs Could Prove to Be Temporary Calm

The USD/JPY has come off of highs made in the middle of last week, but the currency pair remains locked within the upper tier of its long term price range.

As of this writing the USD/JPY is trading near the 138.240 mark, and has come down from highs made when the Forex pair attained an apex around 139.400 on the 14^th of July. While the reversal from the high water marks has proven to be sharp, the USD/JPY remains locked within the upper realms of its long-term price range. The retreat from the elevated values of the USD/JPY could prove to be a temporary breathing stage for traders allowing them to watch the market.

USD/JPY Technical Charts Remain Bullish and Challenging the Trend is Dangerous

Speculators who are betting against the bullish trend which has been displayed in the USD/JPY the past couple of days may have profited. Yet sellers of the USD/JPY currency pair should keep their ambitions realistic if they believe additional movement is going to be attained downwards. Support near the 138.090 mark may prove to be interesting in the short-term, this level could be tested. If the mark fails to hold its value and the 137.810 ratio is tested it still does not mean the bullish trend is over.

• Short term moves in the USD/JPY could prove to be choppy as the upper price range is tested.
• Support levels should be monitored carefully to see if they can actually work as resistance if broken by sustained selling.

While choppy trading should be anticipated for the time being, it is unlikely any selling pressure will result in a sustained drive downwards. Current support levels would have to be penetrated and then begin to act as durable resistance. Technically the USD/JPY has proven over the past handful of months that selling of the currency pair has not been able to be maintained. Until the Bank of Japan transforms and suddenly delivers a hawkish interest rate policy it is doubtful the USD/JPY will see a meaningful selloff.

If the USD/JPY remains above the 138.200 Level this could prove to be a Bullish Signal

Traders who wish to pursue higher moves from the USD/JPY may want to remain cautious, and use current support levels as locations to ignite their buying positions.  If the USD/JPY is able to maintain its stance above the 138.200 level and refuses to trade lower than this mark for a handful of hours, this could prove to be a potential bullish indicator that higher values will again be flirted with and another wave upwards could be demonstrated.

USD/JPY Short-Term Outlook

Current Resistance: 138.470

Current Support: 138.080

High Target: 139.040

Low Target: 137.810

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