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FXstreet.com (Barcelona) - Prior to the sharp corrective move from Tuesday, USD/JPY penetrated into the next line of important resistance highlighted by the 89.15/90.35 zone, as notes JP Morgan FX strategist Niall O'Connor.

The analyst observes how this area is key as it includes both, a long term downtrendline line from the 1982 cycle peak, as well as the 38.2% retracement from the 2010 peak, he says. "Given the importance, of this zone, it seems more likely that some pause can develop particularly with the developing short term momentum divergences" Niall notes.

Niall adds: "Corrective retrac should find support at the 86.80/85.65 zone (Jan and late-Dec lows), before the more important 83.40/82.85 area. Note this includes the 76.4% retracement of the six-week advance and the December breakout area. Violations would question the bullish case. Until then, we prefer buying dips against initial support levels for a test of deeper targets starting with the 92.25/93.50 area and extending into the 93.95/94.80 zone (38.2% retrac from the 2007 high and 2010 peak)."

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