Forex Technical Update
USD/JPY4H Chart 5/22/2012 9:46 AM EDT
USD/JPY pushed above the 79.40 resistance and is now approaching the 80.00 handle in the 5/22 US trading session. The 80-80.20 area contain a declining trendline, and the 23.6% retracement level of the 84.16-78.97 swing. The market is rallying ahead of the BoJ meeting in the upcoming 5/23 Asian session. It looks like it is pricing in more stimulus from the BoJ. The last time we had this anticipation, the market was disappointed and JPY continued to be strong.
Will we have this similar buy the rumor, sell the news scenario? It is possible, especially the market is held below 80.55. An unconvincing amount of stimulus or language against further bond purchases can give JPY strength back. Below 80.50, the USD/JPY still has a chance to retest the 79.00 low, with downside risk toward the 78.30-78.50 area, which might offer support seen in the daily chart.
A break above 80.55 however suggests a bottom is being put in place, and a rally to 81.80 area is in sight, with upside risk toward the 2012 high of 84.16. The daily chart below shows the 81.80 area as the central pivot of a would-be range between 84.16 and 78.96, and therefore is a first target for the break above 80.55.
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.