(Chart courtesy of FX Solutions' FX AccuCharts. Price on 1st pane, Slow Stochastics on 2nd pane; horizontal support/resistance levels in yellow; uptrend lines in green; downtrend lines in red; 50-period simple moving average in light blue.)
1/11/2010 - USD/JPY - After having hit a 4-month high at the top of a medium-term downtrend channel extending from the April 2009 high, price action on USD/JPY (a daily chart of which is shown) has respected that downtrend resistance by tentatively retreating. This medium-term downtrend channel resides within a larger, long-term downtrend channel extending from the June 2007 high. Currently, a key bearish event to watch for would be a significant breakdown below the steep intra-channel uptrend support line (of the smaller channel) that represents the recent bullish price action from the bottom to the top of the smaller channel. A strong breakdown below this steep uptrend line could mean a downside continuation of the medium-term downtrend. In the event that price rises to re-test and breakout above the medium-term downtrend channel, the pair could subsequently reach up to target further resistance around the 96.00 price region and the top border of the larger channel.
James Chen, CMTChief Technical StrategistFX Solutions
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