USDJPY waiting for ’show hand’

Price takes the path of least resistance: We wait for the market to reveal its hand.

USDJPY at crossroad

USDJPY at crossroad

Tagged with:
 

Potential USDJPY pennant in upward channel

Pennant in upward channel

Pennant in upward channel

Pattern requires break of short blue trendline to confirm.

Tagged with:
 

Potential reversal on the cards for USDJPY

The USDJPY is printing a potential wedge on the day chart as well as inverted head and shoulder in the 4-hour. It is critical to confirm with break of neckline or breakout of wedge.

Potential reversal patterns for USDJPY

Potential reversal patterns for USDJPY

Tagged with:
 

The Swissy did a throwback on the day chart. From the hourly chart, it is clearly expanding after base building. Are dollar gains here to stay? DX chart from Ino.com. The USDJPY is making similar move.

Throwback in Swissy after breakout from downtrend

Throwback in Swissy after breakout from downtrend

Beautiful base building in hourly chart

Beautiful base building in hourly chart

Dollar gains visible in DX

Dollar gains visible in DX

Throwback move is also mirrored in USDJPY while a wedge formation reinforces the view of a possible continuation move.

Throwback and wedge reinforces USDJPY continuation

Throwback and wedge reinforces USDJPY continuation

Tagged with:
 

Further Downward Spiral for the Greenback?

Based on a Weekly Chart, USDJPY is intact on a downward Channel as shown on the chart below. Even in the last year, the USDJPY has a smaller channel and is still on the downward trend. So, it is safer to trend following USDJPY by shorting it whenever it reaches the top of the channel.

As from the same chart, the probability of bearish reversal candlesticks is high, so we should keep a watch out for evening stars, spinning tops, dojis, bearish engulfing, etc. Just last week ending 8 Jan 2010,  a hanging man variant is formed, so if this downmove is valid, the possible reversal may be at 84.88.

This is based on the assumption that USDJPY will not exceed 95.23 for the coming weeks.

USDJPY Weekly Analysis

USDJPY Weekly Analysis

With that long term outlook in mind, let’s consider a possible swing movement which could be taking place in the near future.
The 4-hour line chart vividly showed a possible Head and Shoulders pattern which a Right Shoulder is in midst of formation. The validity of this pattern will persist if the tip of Right Shoulder is lower than the Head.

USDJPY 4 Hour Chart

Bears zoom in on USDJPY

Bears might have reason to cheer if USDJPY can stay resisted. That’s because for one, the day chart shows price stalling at a multiple month support – resistance zone.

Secondly, price has broken a trendline on the hourly chart and is now at a pullback confluence with a 76.4% retracement. The steepness of the pullback shows however a lot of bullish momentum so it is prudent to wait for a distribution-type of chart pattern.

Lastly the bearishness has 1 condition, price must not move above the previous high at 93.22.

Support - Resistance Zone

Support - Resistance Zone

Dollar retracement move on hourly chart

Dollar retracement move on hourly chart

Tagged with:
 

Reversal of fortune in the air

The charts show a potential reversal of fortune in the EURUSD and USDJPY.

The USDJPY hourly chart plots a double top that has broken its horizontal support. While this is traditionally a reversal chart pattern, confirmation has to come from another chart – the 240min. In this case, an upward trending support is clearly visible and this has not been violated.

A double top in the hourly chart shows resistance over 2 days whereas a trendline in the 4-hourly chart is a multi-week support.

Double top in the hourly chart

Double top in the hourly chart

USDJPY240

As for the Euro, a potential head and shoulder patten is now clearly visible awaiting confirmation by breaking the neckline. A break and throwback play is now the prudent strategy.

Inverted head and shoulder awaiting confirmation

Inverted head and shoulder awaiting confirmation

If both reversals materialise, we are looking at a retracement move in the Dollar.

Tell A Friend
  1. (required)
  2. (valid email required)
  3. (required)
  4. (valid email required)
 

cforms contact form by delicious:days

Tagged with:
 

Obsessed about trendlines

An institutional trader told us once about his obsession – trendlines. He even boasted about how wonderful his software was because it had a magnet function, the kind where you could pin your trendline precisely to the tail or close of a candlestick.

Why this obsession? Because professional traders could not really forecast price movement. But with trendlines, they could make low risk, high probability bets. Put another way, trendlines define the boundaries of price movement by acting as support and resistance. And because the FX market was so technical, you could get it right if you saw the same trendline that others in the market saw.

If we applied that strategy to the USDJPY, then the story goes like this:

  1. USDJPY continues to be in a downtrend based on the daily chart.
  2. It has however broken the neckline of an inverted head and shoulder chart pattern and so is making a reversal move.
  3. Price is likely to operate in the green zone because the line on top is a resistance and the neckline below is a support.

This observation is made simply by laying down the boundaries with 2 sets of equidistant channels and an additional trendline.

Dollar in downward channel although a reversal chart pattern is visible

Dollar in downward channel although a reversal chart pattern is visible

Currency action this week (week 50)

US retail sales came in better than expected last night sparking a rally in the dollar. With a week-on-week basis, the dollar is particularly strong against the Euro and Swiss Franc by making new highs.

Some headlines:

  1. Reuters – Dollar Touches 2-Month High Against Euro
  2. FX360 – Dollar Takes Stride on Retail Sales
AUDUSD hourly chart

The Aussie is caught at a mid-week support-resistance level. It could be an important determinant of this direction next week.

Swiss Franc hourly chart

Swiss Franc hourly chart

Euro hourly chart

The dollar is particularly strong against the Euro and the Swiss Franc. On a week-on-week basis, the dollar has made new high versus both currency after a base building.

Yen hourly chart

Direction of the yen is unclear.

Tagged with:
 

USDJPY 87 redux

Recall my posting 8 November 2009 ‘Psychological 87‘. With the action in the past week,this level is now an an important technical point to watch out for the USDJPY. If we look at the weekly chart, Week 49 has given us a strong bullish candlestick that shows a firm rejection of the breakdown in Week 48. This is a hint that 87 is a valid support and will be the level to watch in future.

The next level to watch is the resistance line of the equidistant channel. This is the channel that will tell us if the down trend for USDJPY will continue or likely to change.

Downtrend for USDJPY with support at 87.00

Downtrend for USDJPY with support at 87.00

Tagged with:
 

Upcoming Events