USD/JPY likely to retest 111.3 (critical squeeze level) - BNPP

Analysts at BNP Paribas suggest that 111.3 remains an attractive buy level (especially if the squeeze does not materialise) and they continue to expect USD/JPY to rise to 118.2 up to 123.7 by 3Q or 4Q17.

Key Quotes

“USD/JPY’s bearish trend stabilised at the major key support level of 100 in mid-June 2016. The multiple rebounds seen in the key support level of 100 since June 2016 progressively built a price/RSI 14d bullish divergence which supported this level.”

“Prices finally crossed the Ichimoku cloud in early October 2016 and then broke the 106.2 resistance that completed the trend reversal pattern. This breakout supported a quick rise to the 118.2 resistance where a consolidation/pullback corrective move started. (Take profit.)”

“The 2017 consolidation stopped near the 111.3 major support (50% Fibonacci) early February 2017. Prices have since then built a {111.3;115.3} trading range with 115.3 being a key level to the upside tested in March 2017.”

“Short-term price action is bearish and likely to retest the 111.3 support which is a critical FX squeeze level. (similar critical level seen on EUR/USD at 1.0850). Breaking this level would trigger a sharp squeeze toward 106.2 before the bull trend resumes.”