Forex Technical Update
Triangle Breakout: The 4H USD/JPY chart shows a market that was in congestion. Not that the market was volatile before the triangle, but it was in a rising channel before anchoring into the congestion pattern. The 10/12 Wednesday European-US session brought about a big wave of volatility in the direction of Japanese yen weakness seen across the board. The USD/JPY chart shows the RSI break above 70 in the 4H reading. Last time it did so, the market was at 77.70 and 77.85 handles. The current rally looks poised to test the key resistance area here as well.
Range Breakout? The Daily chart shows the 77.70-77.85 area as the resistance zone for the current range-bound market. Therefore a break above is a breakout from a range, where a conventional range breakout projection targets the 79.20 level. Note the RSI in the daily chart attempting to break above 60. Ability to do so represents a loss of bearish momentum, even though the market is still trading below the 200-period simple moving average.If the RSI also pushes above 70, and the 77.70 level becomes support after breaking as resistance, we improve the likelihood of at least getting to 79.20, in a medium long-term attempt to building a bottom.
Fan Yang CMT is the Chief Technical Strategist FXTimes - provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.