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USD/JPY4H Chart 5/13/2012 11:19PM EDT

USD/JPY

USD/JPY's attempt to push below 79.50 was held off last week with a low at about 79.40, and as the 5/14-5/18 trading week starts, the pair is climbing above 80.00. The 4H chart shows price action forming an inverted head and shoulders with the neckline near 80.00.

The RSI is about to push above 60, which would signal a loss of the bearish momentum from the recent swing from about 81.75 down to 79.40.

If the market does hold above 80.00, the next resistance can be near 80.55, which is near 23.6% retracement of the 84.16-79.40 bear run, and also the resistance pivot from early May. A break above that with the RSI here pushing above 70 would signal that USD/JPY is at least sideways instead of bearish in the medium term, with short-term risk to the upside.

The prospect of further bond purchase program may be fading as Masaaki Shirakawa (BoJ Gov) wants to prevent buying more bonds, which can caues hyper inflation and destabilize the JPY. The focus is still to cut the deficit. PM Yoshihiko Noda's party is suggesting doubling sales tax by 2015, currently 5% as part of the solution. For now though, JPY seems to be stable, and still the safe haven it has been during the risk aversion that is stemming from Eurozone and China's slowing growth.

My assessment of the USD/JPY is sideways to bearish in the medium term, after some short-term correction to the upside. If the current correction pushes above 80.55, 81, and then 81.75 are the next resistance levels to look out for.

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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.