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(Price on 1st pane, Slow Stochastics on 2nd pane; horizontal support/resistance levels in yellow; uptrend lines in green; downtrend lines in red; 50-period simple moving average in light blue.)
Price action on USD/JPY, a daily chart of which is shown, continues in its bearishness despite having earlier in the week bounced up off a new eight-month low around 88.20 with a clear hammer candle.
This hammer candle descended all the way down to the bottom border of a rough parallel downtrend channel (it is rough because there was a false break to the upside in early August), before making a bounce.
Currently, price continues to lean towards a bearish bias. Within the current prevailing downtrend, the general 92.00 price region serves as strong resistance, and any break down below 88.20, the noted downtrend low, should quickly target major long-term support in the 87.00 price region.By James Chen, Chief Technical Analyst, FX Solutions
