2/19/2010 - USD/JPY - Recent bullish price action on USD/JPY, a daily chart of which is shown, has risen to approach dynamic resistance around the top border of a parallel downtrend channel that has been in place since the April 2009 high. In the process, the pair has established a new 5-week high. In the event that the bullish momentum continues on to break out above the downtrend channel, which would jeopardize the current overall downtrend, a key resistance target to the upside resides around the 93.75 price region. This support/resistance level represents the year-to-date high, as well as the point at which price previously turned down on reaching the top of the downtrend channel. If the downtrend is currently respected again with a turn back down around the channel's top border, one potential trigger to short would be a breakdown below the short-term uptrend support line extending from the recent 88.50 low. If this trendline breakdown occurs, a key initial support target to the downside resides in the 88.50 price region.
James Chen, CMTChief Technical StrategistFX Solutions
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