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Fan Yang

USD/JPY Has Upside to 110 if 107 Becomes Support; Context is a Sideways Market

USD/JPY is in a bullish swing after bouncing off the 104.50 support. On the daily chart we can see that price consolidated in August, but is surging in September. 

$USDJPY Daily Chart

(click to enlarge)

Bullish Reversal:
- USD/JPY has been bearish since an early rally in 2019 failed to clear 112.
- Instead the pair fell into a new low on the year. 
- However, it held above the 2018 low of 104.50. 
- In hindsight, we can say that USD/JPY has been in a sideways market. 
- In the short-term however, we are looking at a bullish swing. 
- If price pulls back and the 107 area becomes support, we have even more reason to expect further upside.
- But because the overall trend has been sideways, I would limit the bullish outlook to the 110 area. 
- The 110 area would be a previous support pivot and would put USD/JPY near a falling trendline. USD/JPY would also be challenging the 200-day simple moving average. But because USD/JPY is not really bearish I don't think the 200-day SMA would be a strong resistance. 
- If price instead holds under the 200-day SMA and holds under the support/resistance pivot around the July high of 109, then I would shelf the bullish outlook and look for more sideways choppy action with a slight bearish bias.

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