USD/JPY Trading in a Large Triangle Range

USD/JPY (daily chart as of April 11, 2014) traded down through 102.85 once again on April 8 with a long bearish candlestick, and with almost the same strength as the one on March 13 (two red shadows on chart for comparison). The retreat from the high of 104.10 occurred right above an important resistance line (line 2), but was deeper than expected when it broke the major 102.85 support level.

As of this writing, it appears that the pair is still in a large trading range between two trend lines (line 1 and line 2). Currently, price has temporarily broken down below the lower border of the range and is poised to test 101.20 support, which is the early March low. The 101.20 support level is now very close to the daily EMA 200 (bold green moving average line on chart). Watch closely the price action against this support confluence.

From a broader perspective, the currency pair is also trading in a large triangle between the daily EMA 200 and a medium-term downtrend line (line 3) that connects the highs of January 2, January 10, and April 4. Price needs to hold the daily EMA 200 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: 101.20 / daily EMA 200
2nd support: 100.60/75 (multiple lows and highs)
3rd support: 99.55 (November 18, 2013 low)

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