Dollar-yen at 102 (not 100) is more crucial: Charts

Contrary to popular perception, the important number for dollar-yen is 102, and not 100, according to technical analysis. This is the most powerful support and resistance level on the long term-chart. It has acted as a support level in 1994, 2000, 2005; and as a resistance level in 2009. And as the currency pair flirts with the 100-level, the 102 mark is once again a decisive level for the dollar-yen.

The monthly chart shows another resistance level near 107. This is not as strong as the 102 level but is consistent enough to be able to use it to define a consolidation band. Historically, as dollar-yen breaches the 102 level it has traded in the 102-107 range. This suggests that any current breakout above 102 has an immediate upside target near 107.

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The surprising conclusion from the activity on the monthly dollar-yen chart is that the psychologically important 100-level is in actual fact, not that significant, and offers no strong barrier to movements in the currency. It also suggests that the current dollar-yen move above 100 is nowhere near as important as a move above 102.

So where is the support below 102? Resistance near 95 has been well established; it acted as a support level in March and August 2009, and a resistance level in April 2010. This has been a major feature of the market since the last global financial crisis. Once the 95-level was breached in 2013, it became a strong support level. When it was acting as a resistance level, dollar-yen took several weeks of consolidation near this resistance prior to developing a breakout.

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The dollar-yen has spent a long time historically above the 100 level. A new move above 102 has the potential to become part of this longer pattern of behavior. A break above 107 will confirm this.

Any breakout above 107 has a longer-term upside target near 111. This has acted as a resistant level in 1994, 2000 and 2004, and as a support floor in 1997, 1998 and 2006.

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