USD/JPY: a breakout above 109.70 would find resistance sitting at 109.90 [Video]

USD/JPY

We are broadly positive on Dollar/Yen as the succession of higher lows continues. However, it is a real slog for the bulls to find any traction in the move higher. We have long noted that breaking consistently above 109.00 resistance would suggest the bulls gaining control and once more we have seen the market closing consistently above 109.00 in the past week. However, resistance at 109.70 has restricted the bulls again and in the past few sessions, the positive candles have started to turn more mixed, hinting at a lack of conviction. There is still upside potential in the momentum indicators. The RSI is around 60 and tends to falter around 65 on the bull runs, whilst the MACD lines have only just crossed higher and Stochastics still also have room to go. However, as has so often been seen in previous weeks, the breakouts quickly lose traction and are met with a retracement. Buying into weakness is therefore the strategy. The latest higher low is at 108.40 whilst the rising 55 day moving average is at 108.70 and is a good basis of support now. A retreat that finds support around 109.00 would be a good opportunity. A breakout above 109.70 would find resistance sitting at 109.90, whilst 110.65 is key.