USD/JPY Finds Support at Daily EMA 200

USD/JPY (daily chart as of May 11, 2014) found support right above the daily EMA 200 (bold green moving average line on chart) on May 7. Price is now trading at the medium-term uptrend line (line 4) to test the support of the line, and is forming the third cluster below 102.85.

As mentioned in our previous analysis, 102.85 is a key level to watch. Price has tended to form a cluster below 102.85 before overshooting it (three red shadows on chart). Technically, the pair has not cleared 102.85 since February, with price returning back below 102.85 after failed breaks.

From a broader perspective, the pair is trading in a large triangle between the daily EMA 200 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 to retest the key 102.85 resistance level, and then potentially the downtrend line (line 3). The daily EMA 200 has been serving as major long-term support since June 2013.

Support levels below:
1st support: 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: 102.70/85 (key resistance level)
2nd resistance: medium-term downtrend line 3
3rd resistance: line 2