Morgan Stanley picks USD/JPY as its technical FX chart of the week, where MS is tactically bearish. MS provides the key levels where traders should consider selling the pair and placing their stops and targets accordingly.
On the 10-year USD/JPY Chart:
"We reiterate the view that any USDJPY rally should remain limited towards the 125-127 area. The technical picture suggests that 125.86 was a high and we like to sell USDJPY from here. Technically, we would expect the [4]th wave to correct towards the 100 area, followed by a resumption of the uptrend. Our initial target of a correction of the 5-wave structure would be 114.50," MS advises.
On the 2-year USD/JPY Chart:
"USDJPY broke out of the previous range by crossing through the 3-wave top at 122.03. The following move up to the new high was quick and we believe marked the completion of the ascending wave. Given that positioning in USDJPY according to our tracker is long, there is potential for a turnaround if the currency pair continues to trade lower," MS argues.
On the 90-day USD/JPY Chart:
"USDJPY has begun a downtrending 5-wave structure from a high of 125.86. The current 3rd -subwave suggests move below the low at 122.46 initially. A retracement of the iv-wave structure takes you towards 121.31 (61.5% retracement). We would put a stop at 127 as a move above here suggests that the longerterm 5-wave uptrend is incomplete," MS advises.
