Forex Technical Update
The USD/JPY was unable to push above 78.25 after the FOMC meeting on the 1/25 US trading session. The 4H chart shows a sharp rejection, which has followed through and is now trading near the central pivot of the range. This is not exactly the middle of the range (a bit lower), but is a common pivot, here just above 77.30.
Here we can have a true test of USD-strength, and a bullish market should hold above this central pivot. But even if the USD/JPY can just stay above 77.20, 61.8% retracement, despite yesterday's FOMC announcement that it will be extending the low interest rate period through late 2014, we can start building bullish clues.
This first bullish clue can be confirmed with the RSI reading staying above 40, preferably even above 50 and returning above 60. (This reflects maintenance of bullish momentum). Then we should be doubting the strength of the 78.25 resistance as the market will likely test in with more bullish momentum than the first time this year, on the 25th.
A break below 77.20 opens up the 76.55-78.60 low.
Fan Yang CMT is the Chief Technical Strategist of IBTRADE and FXTimes - provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.
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