(Chart courtesy of FX Solutions' FX AccuCharts. Price on 1st pane, Slow Stochastics on 2nd pane; uptrend lines in green; downtrend line in red; horizontal support/resistance level in yellow; 200-period simple moving average in light blue.)
5/13/2008 – AUD/JPY – The traditionally carry-traded cross, AUD/JPY (the daily chart of which is shown), generally tends to respect trendlines and support/resistance levels exceptionally well. The displayed chart helps to illustrate this point. Within the context of a very well-defined parallel uptrend channel (bordered by the solid green lines) that has been in place since at least early 2004, price action has lately been traversing around a shorter-term intra-channel uptrend line (in dotted green). Yesterday’s bar once again turned and bounced up off this line. This occurs after price bounced cleanly up off the bottom channel support line in mid-March to begin a sustained bull run. Since that bull run has not yet reached its proper target at the top of the channel, and price has recently bounced up off the strong support provided by both the dotted green uptrend line and the red downtrend line, the medium-term directional bias appears to be to the upside, with the eventual target being the top of the uptrend channel.
Chief Technical Analyst
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