January 22, 2007 - January 26, 2007

View on USD/JPY: is the further increase unavoidable?

GFSignals team ( http://www.gfsignals.com ) provides a week forecast for USD/JPY

Last week the 121.30 longstanding maximum of 2005 year was tested and broken out. USD/JPY pair rate achieved the 121.50 area as a new longstanding maximum. The situation is not in favour of yen as before which continues to fall against dollar and pound. Now technically the pair is ready to achieve the 125.00 area. Is it inevitability? What can bring to a stop a missile?

Yen is under a strong pressure. Last week our first script was fulfilled: (55%) Upward trend above 121.30. The market renewed the longstanding maximum of 2005 year. The new longstanding maximum is at 121.50 by now. Though there is a high probability of a further USD/JPY pair increase.

Script 1 (40%): Fixation above 121.30 and upward trend to 122.00
Everything says about a comparatively high probability of this script development and pair increase above 121.30. The nearest target is 122-123 area from which a rollback can start with the broken resistance achievement. Then increase can continue with a 124.00 - 126.00 level target.

Script 2 (40%): Side exchange fluctuations within the 119.90 - 121.50 area.
Bears pressure near the 121.30 level can intensify and lead to correction. The pair can decrease to the earlier broken out 119.90 level region where the support view line from December 2006 is situated. From it an upward rebound is expected.

Script 3 (20%): Downward trend to 118.00/60.
It should not be ruled out a probability of pair decline to 119.90 as well as a breakout of this supposed support down.

Resistances
121.30 - the broken out longstanding maximum and 2005 year resistance
121.50 - the local 2007 year resistance as a new longstanding maximum
125.80 - the local 2002 year resistance
135.00 - the longstanding maximums level in the beginning of 2002 year

Supports
119.90 - The broken up resistance of 2006 year, support view line area from December 2006
118.00 - The January minimum of 2007 year
117.00 - The longstanding downward trend line from 1998 year
115.80 - the medium-term view line - the bottom line of the upward channel from May 2006.