Forex Technical Update August 4, 2010
USD/JPY Shows Reversal Signal
- 1H: The USD/JPY was not bottoming yet in the previous update, where the decline was projected to around 85.30, suggested by a negative reversal in the daily chart.
- s very strong in rallying against the JPY. The 100 pip rally in the first 4 hours of the US session, was sharp, and in itself is a reversal signal.
- RSI Signal: The RSI offers a similar signal reflect the momentum has turned bullish in the near-term, and may be the first step to an intermediate term rally, or reversal. This is a pop, meaning the RSI rallied straight from oversold zone to overbought zone, without crossing back under its short-term moving average, which is a simple 5-period one here.
- A buy signal in some systems is formed when the RSI does cross back down, reflecting a correction, and then crosses back up, given that it did not go below 50, or if more lenient 40.
- Expected Resistance; Further Confirmation: In the short term, we see the pair hitting 38.2% retracement level and also the previous consolidation support zone. This will provide some resistance.
- If the market can eventually break above after a pause, it shows that the market has bottomed.
- As I mentioned in yesterday's video, if the USD/JPY breaks above both the simple moving averages (50 and 200 period), then a true reversal signal is given for the intermediate term.
- For now, this is still a short-term signal, but it can be treated as a good first sign of reversal. More confirmation needed though.
Commodity Trading Advisor
Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analyses.
All screenshots are made from VT Trader 2.0 and are of actual market data at the time of the screenshot.