USD/JPY Staying in Range for Now
12/09/2009 12:01 am EST
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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 to begin the new week on USD/JPY (a daily chart of which is shown), after the marked bullishness that dominated on this pair last week, has respected a key downtrend resistance line (within a parallel downtrend channel) extending from the April high.
Monday’s price action retreated from this downtrend resistance after hitting a four-week high on Friday. Continued bearishness coming off that high should continue the prevailing downtrend in the pair, targeting support around 88.00 once again, with further support around the 87.00 price region. A break down below the current intra-channel uptrend support line should signal this further bearishness.
To the upside, the noted downtrend resistance line should continue—at least in the near term—to serve as dynamic resistance going forward.
By James Chen, chief technical strategist, FXSolutions.com