USDJPY potential basing and upside.

Following on from yesterday’s post with regard to risk of a summer rally for equities, the USDJPY is also showing some signs of basing and may offer a potentially cheap risk/reward set-up.

• The chart below shows USDJPY daily.
• The features which stand out to me are:
• The breaking of the downtrend of the past 3 months.
• The test of the downtrend last week, which successfully held.
• The basing pattern of the past 4 weeks, which appears to be an Inverted Head & Shoulders.
• The breaking (though intraday only thus far) of the Neckline of this inverted  H&S.
• The solid break (though still only intraday) of the 34 day simple moving average.
• Supporting this is a similar matching break in the downward trend in momentum, which is starting to trend higher.  

Currently there is a favourable target cluster above in the 81.69-82.05. Which would suggest there may be around 200+ points in this move if it can gather some steam?

79.79(last week’s high) and the round number at 80.00 may prove tough hurdles, and if not clearly broken could act to dent any progress.  Support for the upside call should remain as long as this holds over 78.60 in the next few days.  – I think if this can start breaking higher, and gaining some momentum, then the current area should revert to support.