The determination of the Bank of Japan to keep interest rates low while their counterparts in the US are pushing for continued rate hiking in the July meeting is keeping the USD?JPY on bid. The pair is up 0.50% this Tuesday, making it the third day in a row that the price action has headed north following the 2-day correction of 22/23 June.
The USD/JPY has breached the resistance at 135.065 and is gradually inching towards its all-time highs seen during the Japanese banking crisis of 1997. Some have likened the BoJ’s action to burying its head in the sand, but one thing is for sure: the USD/JPY bulls are not complaining.
The charts indicate a bullish picture technically, as the uptrend remains intact. The price action is now approaching the 21 June at 136.508 to test it. Here is the price outlook for the USD/JPY.
The Investingcube S-R indicator favours buying on the dips, with 135.64 being identified as the potential buy price. A conservative entry could be made at 135.065, where we have the 1 January 2002 high. If we stick to the S-R indicators entry price, the bulls must allow the price action to retrace a bit to meet this entry target. If this target is met, 137.00 and 138.00 are the two potential profit targets. These correspond to highs seen in May 1998. The stop loss set by the indicator is at the 133.95 price mark, where the highest price level of January 2002 is seen.
On the flip side, a decline below the stop loss invalidates the trade setup of the S-R indicator. Contrarian trades would then target the April 2022 high at 131.446, or the August 2015/March 2022 high at 125.112, acting in role reversal. Otherwise, those waiting on conservative dip-buying entries may decide to wait until there is a pullback to the 131.446 support, which houses the 1 May 1998 low and 2 May 2022 high.