USDJPY - January 08, 2015

The mainstream press has recently warned that some investors are worried about a possible rise of the yen next year, because of the instable international political situation, crude oil prices, and Russian ruble.

The BOJ’s quarterly “tankan” survey also showed this month that Japanese businesses are expecting the yen at 103.88 per US dollar by March 2015 (despite the yen trading at 119 something). 

I'm not really into reading the future, but technically such a scenario is very probable. Since the USD/JPY pair mirrors the Nikkei, you can check my analysis of the latter for some insight. 

What's sure is that, just like the Nikkei, the USD/JPY pair has lost momentum and made a series of lower highs on December 22, 28 and January 1. The previous high of December 7, 2014 is at 121.700. 

On monthly and weekly charts, the RSI is largely overbought and the ichimoku cloud looks like a stretched rubber band. Too high, too quick, these candles need some rest. I would like to see a candle reach 116.300 -which is the daily ichimoku and a monthly support- to envisage going long on a short-term trade. 

Otherwise, if this stretched market wants to retrace, it is possible that we see 104 since it is only the 38% retracement of the almost-uninterrupted rise since January of 2012.

At this point, obviously, the pair is unquestionably still bullish. Everything is pointing North, but lower highs and higher lows combined with low volume mean that you should stay away. 

One ideal scenario is to see 116.350, where you would have set a trap (with a stop), then the pair bounces towards 121.800 -with rising volumes-, and breach through it, closing a daily candle around 122. The next major resistance would be 124, which is the high made on June 1, 2007.