Forex Trading: USD/JPY eyes channel support

on Feb 12, 2014
Updated: Oct 21, 2019
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**iNVEZZ.com, Wednesday 12 February:**

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Asian shares rose today after the House of Representatives yesterday narrowly approved a one-year suspension of the US debt limit. The 221-201 vote was backed mainly by Democrats and, in deference to President Obama’s demand, didn’t tie the increase of the debt ceiling to any conditions.
The Nikkei 225 opened today with a gap up at 14,821.73, after yesterday closing at 14,718.34, with the Japanese benchmark consolidating throughout Tokyo trading to end the day 0.56 percent ahead at 14,800.06.

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In the day’s European session so far, the USD/JPY has been trading just below the critical level of 102.53, which is the 38.2 percent Fibonacci retracement of the decline from 105.44 to 101.75.
If the pair should bounce from the lower line of its rising channel (see chart above), the bulls could push the quote above the 50 percent Fib at 103.09. The Relative Strength Index on the 4-hour chart has been in a gradual uptrend since 24 January and a decline to its line of support could present a buying opportunity.

To this point though, price and momentum have not diverged markedly, indicating the possibility that the USD/JPY could extend its gains further in the short term before correcting.

To the upside, the pair could stall below the 61.8 percent Fib at 103.64 and find resistance near its 50-day Simple Moving Average, which is currently in the vicinity of 103.38.

Southbound, the quote could find support near the 23.6 percent Fib level at 101.85, which fuelled two bounces for the pair at the end of January.
Japan’s Tertiary Industry Activity came out at 23.50 UTC yesterday, showing a 0.4 percent drop m/m in December and falling short of forecasts for a more modest decline of 0.2 percent. But November’s rise is now 0.8 percent, revised up from 0.6 percent.

Japan’s Machine Orders plunged 15.7 percent m/m in December, posting the measure’s biggest month-on-month shrinkage in five years. Analyst had been expecting the reading to fall just 4.1 percent, after November’s gain of 9.3 percent.
Right now, the USD/JPY is trading at around 102.51, up 0.12 percent intraday.

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