(Chart courtesy of FX Solutions' FX AccuCharts. Price on 1st pane, Slow Stochastics on 2nd pane; horizontal support/resistance level in yellow; uptrend lines in green; downtrend lines in red; chart patterns in magenta; 50-period simple moving average in light blue.)
2/02/2009 – USD/JPY – Price action on the USD/JPY daily chart, as shown, has formed a small triangle pattern as it consolidates between key support/resistance levels. Currently languishing near the 13-year, double-tested lows around 87.00, this pair has been in a horizontal, converging consolidation for at least a week now. A breakout to the upside of this triangle should meet resistance around the key 91.00 support/resistance region. Any strong breakout above 91.00 should target further resistance at the peak of the potential double-bottom, around 94.60. And a subsequent breakout above that level would confirm a double-bottom reversal formation. To the downside, the 87.00 region remains as exceptionally strong support, as it represents a long-term, 13-year low in the pair. Therefore, any substantial breakdown of that level could carry enough bearish momentum to target even further extreme support, potentially even as far down as the 80.00 region.
James Chen, CMT
Chief Technical Strategist
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