(Chart courtesy of FX Solutions' FX AccuCharts. Price on 1st pane, Slow Stochastics on 2nd pane; downtrend line in red; Fibonacci retracements in grey; 50- period simple moving average in light blue.)
5/30/2008 – USD/JPY – Price action on the key USD/JPY daily chart, as shown, has reached a critical resistance level. This level is in the form of a significant long-term downtrend line (represented on the chart by the long, red line), which has provided downtrend resistance since the multi-year high in the pair was reached in June of 2007. A turn back down or at least consolidation at or near this line would be a reasonable outlook from a technical perspective. Current dollar fundamentals would also lend some strength to this bearish outlook. In the event of an impending turn at or near the resistance line, the next major support to the downside resides in the 102.50 region, which has established itself as a significant support level in the last month or so. A fundamentally-driven break to the upside, on the other hand, would target strong resistance around the historically significant 109.00 level.
Chief Technical Analyst
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