Forex Technical Update

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USD/JPY 4H Chart 10:29PM EDT 8/12/2012


The USD/JPY rallied to a new weekly, and August high last week during the Thursday (8/9) session, only to fall sharply back in the consolidation zone roughly between 77.90 and 78.80. The 4H RSI reading remains stuck between 40 and 60, which reflects consolidation, as do the whipping moving averages (100, 55, 21, 8). However, price is trading under the 200 4H-SMA, and the RSI tagged 30 before popping back in the 40-60 area, so we still have some bearish bias in this pair for this 4H time-frame. If the RSI falls under 60 in this time-frame, we should be seeing a bearish continuation.

The 1H time-frame shows nascent bearish momentum as well, with the RSI dipping below 30. If the market continues the bearish momentum established on Friday (8/10), the RSI should remain below 60. Also if price action pulls back then finds resistance at the 200-Hour SMA, it is known as a slingshot, with bearish implications. I would say, within the bearish outlook, there is some upside risk back to 78.50, which crosses the 200-H SMA, but if it holds below the other moving averages, we can still assess the market as bearish (accompanied by the RSI holding below 60).

The bearish outlook has the 77.90 low from last week as a near-term target, and if that breaks, the USD/JPY is exposed to the May low at 77.60, and then the next support pivot at 78.55.

USD/JPY 1H Chart 10:25PM EDT 8/12/2012


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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