Forex Technical Update

Previous: USD/JPY Maintains Bearish Stance Back at Consolidation Support (7/30)

USD/JPY 4H Chart 10:10PM EDT 8/5/2012

USD/JPY 8/5/2012 4H chart

The USD/JPY was pushing to a new high for the week last Friday after the better-than-expected Non-Farm Payroll data. However, the rally retreated after briefing cracking the recent range high as well as a declining channel resistance trendline, going back to the June-high at about 80.60. In the 4H chart, the market barely closed above the 78.70 resistance pivot before showing respect to this resistance cluster.

The RSI reading in the 4H chart also suggests that the bearish momentum from the recent downtrend from June is still intact, as it was not able to push through 60. The RSI reading has been under 60 since 6/25 and has tagged 30 multiple times, reflecting persistent bearish momentum.

Finally, the structure of the correction since July 23 MAY be complete since it can be categorized as a double 3 (XYZ), where all the waves have abc (3-wave) fractal structures.

The bias is therefore bearish at least in the near-term toward the 77.95 range low. The next support pivot, established as the low in May is at about 77.60.

As we consider this bearish scenario, it should be noted that the upside risk for further consolidation/correction can be around 79.00 or where price meets the projected declining trendline going back to the 2012-high at about 84.20, established in March.

USD/JPY Daily Chart 10:15PM EDT 8/5/2012

USD/JPY 8/5/2012 Daily Chart

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.