January 29, 2007 - February 02, 2007

View on USD/JPY: four-year maximum

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

Last week brought us 121.80 as the new longstanding maximum from March, 2003. It is the second new January top already after the breakout of the 2005 year maximum in the 121.30 area.
There is a strong pressure to yen on the market even though a short-term USD/JPY course fall during the week. Technically the pair is ready to achieve the 125.00 area.

Yen is under a strong pressure. We have seen new longstanding tops. A new maximum is 121.80. And nevertheless there wasn?t a further increase. Last week our second script was fulfilled: (40%) ?Side exchange fluctuations within the 119.90 - 121.50 area?. During the week the pair sharply came down to the 120.20 level support and then sharply rebounded. Technically the two-month short-term upward trend linear projection from December 2006 which was indicated in the last review became a support line. Such a pair behavior confirms an importance of the mentioned projection.

Script 1 (45%): A further upward trend with the 122.50 target.
There is a strong possibility of a further USD/JPY pair increase in the nearest future. Both the upward 121.80 breakout and the next rebound from the mentioned above trend line will promote it. The nearest target is the 122.50-123.00 area where a number of linear projections run as potential resistances.

Script 2 (20%): Side exchange fluctuations within the 119.90 - 121.80 area.
Judging by sharp rebound last week after the new yearly maximum reaching it is possible to suppose the next currency decline for instance to the same level 119.90 or somewhat lower to 118.00. Though even the next decline under 121.00 by the end of the week may stand for the mentioned above trend line breakout and correction fluctuations dragging out.

Script 3 (35%): Deep correction fall with target to 118.50.
It should not be ruled out 119.90 downward breakout as the nearest supposed important support. It may take place after a breakout and course fixation under the two-month trend line. Stronger support levels at the 118.00-119.00 area will do a target for this fall. This area can hold the pair and lead to the next upward trend in February. The third script will drag out the pair fluctuations on the reached high levels and may lead then both to deeper fall (118.00 downward breakout) and to further rise (121.30/80 upward breakout).

Resistances
121.80 - the local 2007 year resistance as a new longstanding maximum
121.90 - the 2003 year maximum in March
125.80 - the local 2002 year resistance
135.00 - the longstanding maximums level in the beginning of 2002 year

Supports
121.00 - projection line area from December, 2006 - the two-month trend line
119.90 - the broken up maximum of 2006 year
118.00 - the January minimum of 2007 year
117.20 - the longstanding downward trend line from 1998 year


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