Forex Technical Update
After a parabolic rally from 76.00, the USD/JPY has retraced from 84.16 back to 83.00. The 1H chart shows a market that has completed an ABC correction where A=C as the USD/JPY tags the 83.00 handle. (Actually, exact wave equality would require C to reach 82.90). This is also near the 50% retracement of the 81.95-84.16 swing, which is at 83.06. The RSI shows loss of bullish momentum as we have this zig zag type correction, which some harmonic wave practitioners would call a Gartley.
Looking at the location of a rising trendline and the 200-hour simple moving average, this market is still bullish until we break below these support factors below 82.50. Then, we can be looking at a more significant correction. In the mean time the area between 82.50 and 83.00 could be one of renewed buying even if its within a larger consolidation pattern and no longer a bullish continuation toward the 84.50-85.50 resistance area noted in the last update.
Note that the 4H RSI would be nearing 40 if the market nears 82.50. A market with bullish momentum should remain above 82.50 and keep the RSI above 40. Otherwise, we should be looking at a slide down to test the 81.80-82.00 pivot area for further corrective downside risk. If the market pushes below 81.80. breaks, bullish expectations should be limited to the short-term and to the context of a consolidation, contained below 84.16.
We will discuss this and other currency markets all week in our Market Intelligence Briefings. Click on the link below to find out more: http://www.fxtimes.com/market-intelligence-briefings-limited-time-offer-ends-3232012/
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.