Forex Technical Update
USD/JPY 4H Chart 9:40AM EDT 8/14/2012
In the previous update, I noted that USD/JPY had bearish bias in a directionless market. However, price action did not re-establish bearish momentum. The 4H RSI showed the RSI attempting to push back below 40 as price tried to push back below a near-term support pivot at about 78.15. Both failed, and the market rebounded, and then accelerated sharply above the consolidation high near 78.80. The USD/JPY is now looking like a rising channel in the 4H chart. The RSI is also about to kiss 70, showing nascent bullish momentum in this time-frame.
As the market rallies toward 79.00 in the early 8/14 US session, it is testing/cracking a declining trendline that has held price action since the March and 2012 high at 84.20. The daily chart shows a strong bullish candle in development, although we still have a whole US session to go before the candle closes.
Over the next few sessions this week, we will find out if the breakout is clear, and whether we will get a throwback to confirm support from the consolidation area the market appears to be moving up from.This 79.00-79.20 area might provide at least some brief near-term resistance.
If the bears can be held off, the bulls in the USD/JPY market exposes the 80.60 resistance pivot in the short to medium term. It should be noted that if the rally continues to be choppy within the slowly rising triangle, it is still categorized as a flag, with the bias on bearish continuation. However, if we have price action accelerating above the channel resistance, we are more likely to be in the bullish mode with 80.60 in sight.
USD/JPY Daily Chart 9:45AM EDT 8/14/2012
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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