Forex Technical Update
The FOMC statement did not provide anything new and the USD/JPY continued to recent attack on the trendline seen in the 4H chart. It appeared to be a market trying to anchor into a rising channel out of the declining channel from the 84.10 area. A break above 81.85, and a push of the RSI above 60 would have been some clear signs of this breakout. However, after Bernanke spoke today, the market was NOT committed to this scenario.
Next, if the USD/JPY falls below 81.00, we are likely in a bearish continuation within declining channel. Whether the market is committed to this scenario will depend on the next risk event for this pair, this time from the other side of the pond. The BoJ is set to meet and provide guidance on policy after the 4/26 global session. It will be in the evening in the US during 4/26, but the morning of 4/27 Asian trading.
If the market can hold below 81.00 after the BoJ, look for retest of 80.28, attack of the 80.00 handle, and the 79.50 pivot, seen in the daily as the high from 10/31/2011. A break below that opens up 78.50, near the 200-day SMA and common highs from the consolidation between Nov. 2011 and Feb. 2012.
On the other hand, if stimulus if the market picks up on any stimulus talk by JPY, and USD/JPY fails to sustain a break below 81.00, continue to watch for a break above the channel resistance and 81.85 to be signs of bullish breakout that can open up the 84.00 handle.
Fan Yang CMT is the Chief Technical Strategist, trader, educator and a of the main contributors to FXTimes - provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.
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 analysis.