Forex Technical Update
A bit of correction might be ahead for the USD/JPY as it it held under 80.00. The bull run has accomplished a break above the key pivot near 79.55, which was resistance in Nov. 2011, and also support during May and June of the year. The RSI in the daily chart was pushed above 70, a sign of bullish momentum, although in the short-term, it reflects overbought condition.
The 4H chart also shows overbought conditions, but there are no signs of slowing down just yet, except for the hanging man candlestick. However no significant bearish candles have followed and the market is basically indecisive as it looks for clues to either break through 80. Even the bearish outlook is very short-term at the moment. A rising trendline is the maximum expectation, somewhere at about 78.50 if price action does start to slide now. Only a break below 78.25 puts the bullish scenario to the side as it would reflect a choppy and sideways market even if the bias has turned bullish.
From the fundamental front, there aren't many significant economic releases from the US or Japan. Remember this JPY weakness that started last week was caused by an expansion of Asset Purchase Program by the BoJ. The advantage USD has on JPY reflects the edge it has in its economic recovery. Therefore, while other USD and JPY crosses have been trading mainly risk sentiment, we may want to rely more on economic data when assessing USD/JPY.
This analysis is of a snapshot of the market and the anticipation based on the current conditions. Adjustments are often needed especially when preparing for a trade as well as during a trade. To follow up and explore trading plans and risk management techniques as well as fundamental bias and event risks, don't miss IBTrade's daily Market Intelligence Briefings live at 8:00AM EST throughout the week. To gain free access to these sessions, register at here at IBTrade. You will receive and email with the link and password before each session once you have registered.
Fan Yang CMT is the Chief Technical Strategist of IBTRADE, trader, educator and a of the main contributors to FXTimes - provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.