(Chart courtesy of FX Solutions' FX AccuCharts. Price on 1st pane, Slow Stochastics on 2nd pane; uptrend lines in green; downtrend lines in red; 50-period simple moving average in light blue.)
5/08/2008 – USD/JPY – A tentative breakdown of the steep, short-term uptrend line on the USD/JPY daily chart, as shown, has just been initiated by the current daily bar. This anticipated event occurs within the context of the larger long-term downtrend channel (represented on the chart by the parallel red lines). As this key currency pair has been characterized throughout this longer-term downtrend by consistent breakdowns below short-term uptrends (represented by the green lines), the current breakdown may be indicating a possible impending follow-through to the downside. Oscillators like the displayed Stochastics are lending strength to this downward bias, as they have just emerged down from overbought territory. In the event of a continued follow-through of downside momentum after this significant break, the next major support level to the downside resides in the region of an important long-term support/resistance level around 101.50.
Chief Technical Analyst
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