USD/JPY: Trend-line support looming near 98.20
- We have a thrice tested trend-line coming in near 98.20 (see chart);
- Short-term sentiment is bearish with market turning against the USD but also unexpectedly risk-averse post FOMC;
- Market reports suggest that the big macro funds remain quite long of USD/JPY.
If you want to be long USD, this pair seems like the obvious choice but we have a decision to make; is the recent stagnation near 100.00 a sign of consolidation or a sign that the market can’t go any higher? I’m not sure, but as year-end nears and this pair still fails to break higher, those big long positions will start getting trigger happy.
That doesn’t help us much on intraday basis, but my best suggestion is to wait and see what happens at trend-line support near 98.20. If it is fiercely defended, then the bulls still have some ammunition left and we can try buying with tight stops. If it breaks and gaps lower, then the momentum will shift and we should be in rally-selling mode.