Price takes the path of least resistance: We wait for the market to reveal its hand.
USDJPY at crossroad
On February 25, 2010, In Technical Studies, By Soh Tiong Hum
On February 4, 2010, In Technical Studies, By Soh Tiong Hum
Pennant in upward channel
Pattern requires break of short blue trendline to confirm.
On January 29, 2010, In Technical Studies, By Soh Tiong Hum
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
On January 19, 2010, In Technical Studies, By Soh Tiong Hum
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
Beautiful base building in hourly chart
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
On January 12, 2010, In Technical Studies, By David Yew
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
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.
On January 7, 2010, In Technical Studies, By Soh Tiong Hum
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
Dollar retracement move on hourly chart
On January 4, 2010, In Technical Studies, By Soh Tiong Hum
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
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
If both reversals materialise, we are looking at a retracement move in the Dollar.
On December 30, 2009, In Technical Studies, By Soh Tiong Hum
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:
- USDJPY continues to be in a downtrend based on the daily chart.
- It has however broken the neckline of an inverted head and shoulder chart pattern and so is making a reversal move.
- 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
On December 12, 2009, In Economic Indicator, Technical Studies, By Soh Tiong Hum
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:
- Reuters – Dollar Touches 2-Month High Against Euro
- FX360 – Dollar Takes Stride on Retail Sales
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
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.
Direction of the yen is unclear.
On December 6, 2009, In Technical Studies, By Soh Tiong Hum
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
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