USD/JPY: Chance to Join the Rally? (May 16, 2013)

There could be a chance to hop in the overall uptrend as the pair is currently finding support at the Fibonacci retracement levels.

Take note that the 50% Fibonacci retracement level is in line with the 102.00 major psychological support, which used to act as resistance in the past. The pair already seems to have bounced off this area and is showing upward momentum, although stochastic hasn’t reached the oversold region yet.

If there’s room for a larger correction, USD/JPY can still pull back down to the 61.8% Fib before resuming its uptrend. But if you think that the pair is headed north from here, you can just opt to set your stop below the lowest Fib and go long at market. Aiming for the recent highs or the 103.00 mark could yield a good reward-to-risk for the day.

The risks for the remaining sessions are the U.S. data releases, namely the CPI, building permits and housing starts, as well as the Philly Fed index. Note that U.S. data has been weak yesterday and has weighed on the U.S. dollar.

By Kate Curtis from Trader's Way