The FX Trader’s view –
Last week important supports in USD/JPY were violated, swinging the directional bias in favour of shorter term bears. Now that the dust has settled we take a look at the current technical position of this market.
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WEEKLY CHART:
This chart previously found strong resistance from the 61.8% recovery level.
Latest weakness, reinforced by the support line break, at least postpones any attempt higher –we currently don’t know whether this is a temporary pullback phase or if the 87.11 lows are at serious risk. -
DAILY CHART:
We must respect the bears after last week’s break below key 94.00/93.82 support.
But we are reluctant to give a name to the apparent top formation as its importance is uncertain.
In Tue’s FX Trading Guide we noted s/term support could be seen from the bear channel base projection so this week’s rebound is no surprise.
It enabled us to establish theoretical shorts in a suggested 93.80/94.00 area, initial stops at 95.25 and targeting 92.00 for partial profits.
First resistance is now offered by the 94.86 23-Jun low and ideally
this will hold. A stronger recovery through 96.99 01-Jul high would negate the bear view.
Meanwhile, channel base support notwithstanding, the bears have a sporting chance of seeing a move lower to the 90.50 76.4% area. There are also two Fibo projections quite near to this, although we reserve judgment as to how effective these are in USD/JPY.
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