(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; 50-period simple moving average in light blue.)
7/09/2009 € USD/JPY € Yen strengthening this week has manifested itself in a dramatic fashion on USD/JPY, a daily chart of which is shown. Needless to say, the 300+ pip plummet in the pair yesterday, not to mention the even more drastic drops in the yen crosses, highlighted the sheer magnitude of the yen€™s very recent dominance. The drop on USD/JPY reached a low below 92.00 before relenting and retracing. That low point represents the lower border of a parallel downtrend channel that price has been traversing since the early April high. Therefore, yesterday€™s move reached a significant target low for short traders. But the bearishness in this pair is likely not over yet. A key further support target to the downside resides in the important 91.00 region. Any substantial breakdown below that level could ultimately target the key 87.00 level. Tentative upside resistance in the context of the current downtrend resides in the 94.00 price region.
James Chen, CMT
Chief Technical Strategist
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