Sometimes you can't see the forest for the trees. If you examine the momentum indicators on a daily chart of USDJPY it could appear to be a candidate for short positions. After a monthly month rally it is not surprising to find momentum overbought and or with bearish divergences.
An examination of the monthly momentum indicators tell a different story.
Both Stochastic lines are still below the overbought zone of 80%
RSI is neutral at 57%
MACD lines are about to have a bullish crossover at the 0.00 line
It appears the USDJPY rally could last for six to nine months and probably move above the June 2015 top at 125.856.
The most likely target would be near the area of the January 2002 peak of 135.16.
A Fibonacci projection of the 2011 to 2015 rally supports this target.
The 2011 to 2015 rally was 66.5 % x .618 = 41 % x 98.787 June 2016 bottom = 40.50 + 98.787 = 139.287.
Avoid shorting USDJPY and look for entry points to go long.
Mark
An examination of the monthly momentum indicators tell a different story.
Both Stochastic lines are still below the overbought zone of 80%
RSI is neutral at 57%
MACD lines are about to have a bullish crossover at the 0.00 line
It appears the USDJPY rally could last for six to nine months and probably move above the June 2015 top at 125.856.
The most likely target would be near the area of the January 2002 peak of 135.16.
A Fibonacci projection of the 2011 to 2015 rally supports this target.
The 2011 to 2015 rally was 66.5 % x .618 = 41 % x 98.787 June 2016 bottom = 40.50 + 98.787 = 139.287.
Avoid shorting USDJPY and look for entry points to go long.
Mark