Forex Technical Update June 28, 2010  AUD/JPY Completes Head and Shoulder  

  • 1H and 15min: The AUD/JPY completed a head and shoulder pattern in the beginning of the US session.
  • The 1H chart shows the inability of the RSI to rise above 60. It broke above, but only temporarily.
  • Looking back, we also see the 1H RSI break below 40, and even below 30, suggesting intraday bearish momentum.
  • The 15-min chart, showed that the market was bullish in the near-term to start the week, but this attempt is violated as the RSI broke below 40, and is now threatening to break below 30.
  • This all accompanies a break below the support of a head and shoulder.
  • A pullback can help improve the odds that this is a bearish continuation.
  • Also, other yen crosses are also showing yen strength. Sentiments affecting USD and JPY are the main factors moving FX markets these days, instead of individual factors in the Aussie for example.

  • Daily and 4H: The daily chart shows a bearish outlook, with a projection to 70.40 suggested by a negative reversal. But we see that there are some confirmations needed. The rising support has not be broken, and the uptrend is therefore inviolate.
  • Instead we see in the 4H chart, a break above a counter-trend resistance. This suggests some near-term bullish attempt. The latest 4H candle stopped this near-term bullish attempt.
  • The pending trendline should give caution to the bearish signal seen in the 1H and 15-min chart. The completed head and shoulder may be followed by some bearish attempt, but that goes against an intermediate-term rising trendline, so the market may still respect the higher time-frame mode.
  • However if this rising trendline breaks, the probability of 70.40 as a target is improved. Meanwhile, the 72 low is a more conservative target.

  Fan Yang Currency Analyst Commodity Trading Advisor

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