Forex Technical Update

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USD/JPY 4H Chart 10:15PM 10/25/2012

USD/JPY 10/26/2012 4H chart

Broken trendline: The USD/JPY retreated after breaking above the 80.00 handle, short of the previously noted 80.60 resistance pivot. Inability to hold above 80.00 lead to a fall toward 79.50 during the 10/26 session as we can see in the 4H chart.  This move broke below a rising trendline from just below the 78.00 handle from 10/11. The RSI in the 4H chart is at 40. Clearing below this shows lost of bullish momentum in this time-frame.

Retracement targets: Looking at the 4H chart, we see that 38.2% retracement of the rally we had through October so far is at 79.25, a possible near-term support/target. A slightly more aggressive retracement would be 50% in the 78.90-79.00 area.

Big picture: In the big picture, USD/JPY has been trying to come off a bottom from historic lows. It has been choppy and it can stay like that for quite a while. So in the short-term expect sudden sharp retracements, but I am confident in the lows from last year to hold. I am looking for deep retracements to add long positions.

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.

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