USD/JPY: Testing 111.15-20 Confluence Support

Judging by how the bullish trend has panned out since prices bottom out sub 110.00, it looks as though the US ISM-induced spike is still part of an incomplete 3 leg upcycle, in which we would still be missing another push into new highs. The fact that the bullish extension off 110.00 on March 28th went for a 141p run, suggest there is still an awful lot of buyers committed, given that in terms of magnitude, such push achieved almost 50% as much as the previous 1st push of nearly 100p. The first conviction test for buyers is occurring as I type, as an area of strong confluence at 111.15-20 (ascending trendline + resistance turned support) is being tested. The price has pulled back, as it’s been the case in the entire sequence of movements, at the 100% proj target. It’s worth noting that even if we were to see further setbacks of the bull run, as long as the deeper ascending trendline originating off sub 110.00 is violated, this is a market with still credence to be bought from a technical perspective. As we shift our focus towards intermarket flows, the recent rampant run in the S&P 500, US yields and the overall bullish stance in the DXY offers a positive background. It’s important to monitor any expected weakness in the DXY, given the late stage cycle in EUR/USD, as that may create additional sell-side pressure, conditioned to the performance of equities and bonds.