USD/JPY Continues to Trade in Large Triangle Range

USD/JPY (daily chart as of April 23, 2014) found support on April 10 at 101.30, right above the support confluence level (gray shadow on chart around 101.20) mentioned in our April 11 analysis. Current price is now once again facing the important resistance zone of 102.70-102.85.

If the pair can clear 102.85, it could continue to rise to retest the downtrend line (line 3 on chart). In the event that price breaks down below the revised short-term uptrend line (line 1), a potential decline to line 4 should be expected.

The currency pair is still trading in a large triangle between the daily EMA 200 (or line 4 now) and the medium-term downtrend line (line 3). Within the large triangle, the pair is also trading in a flag-like range between two uptrend lines (line 2 and line 4).

Price needs to hold the daily EMA 200 (bold green moving average line on chart) in order to stage a significant potential upside move. Note that the daily EMA 200 has been serving as major long-term support since June 2013.

Support levels below:
1st support: line 1
2nd support: line 4 or daily EMA 200
3rd support: 100.60/75 (multiple lows and highs)

Resistance levels above:
1st resistance: 102.70-102.85 (key support/resistance)
2nd resistance: medium-term downtrend line 3
3rd resistance: line 2