Monthly chart:

The pair broke above strong cluster of resistance (trendline that contained the long-term downtrend in years 1986, 1990, 1998; 23.6% retracement of the 1982 to 2011 decline; 2007 high at 124.14). After weak pullback in June, the pair retested the cycle-high (~125.85) in August before it sold off strongly amid concerns in regard to global growth, China slowdown, oil prices and Fed tightening.

Weekly chart:

In the last week of August, the pair broke back below the monthly resistance cluster. It briefly traded south of the 50 week SMA, which has been supporting the uptrend since its commencement in Q4 2012, before pulling back above it. 115 is another strong support level ahead of 100 week SMA. Sustained foothold above 120 needs to be established to neutralize the technical picture.

Daily chart:

China slowdown, global growth concerns, oil price decline and expectations of Fed tightening are the factors that contributed to the risk-off sentiment that sent the global stocks tumbling. On August 24th, the worries culminated into a market rout that saw the pair selling to almost 116. It recovered since then and is trading back above 120 but the huge spike leaves traders wondering whether this is just a beginning of a deeper correction.


Following tentative signs of recovery in Japanese economy, BOJ is expected to remain on the sidelines for at least a couple of months. The direction of the pair will thus depend mostly on US economic data, expectations regarding timing of rate hikes and direction of the global stock markets. On the 1st of October, 2015, at 12:00 GMT, I see the pair trading near 119.75.
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