width=398(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; chart patterns in white; 50-period simple moving average in light blue.)

3/02/2010 - USD/JPY - Price action on USD/JPY, a daily chart of which is shown, has just formed a tight consolidation after having made a strong bearish run in late February. This occurs within the context of a continuing parallel downtrend channel that has been in place since the 2009 high in April. Having just respected the upper resistance border of this downtrend channel on 2/19/2010, price went on to breakdown below a short-term uptrend support line on 2/23/2010. That bearishness followed through to approach strong support around 88.50 before falling into the current consolidation. Any significant breakdown below 88.50 could signal further bearishness potentially targeting further support around the 87.00 price region. Dynamic upside resistance within the context of the current overall downtrend continues to reside around the top of the noted parallel downtrend channel.

James Chen, CMT
Chief Technical Strategist
FX Solutions

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