Daily FX Technical Analysis: USD/JPY


Active Trader
Jan 12, 2010
The dollar's breach of the resistance at 94.69 turned out to be somewhat brief and the upmove from the 2009 low of 84.82 extended to only as far as 94.98 before a spike down to 88.15, which as mentioned in the previous update, shows that the 5-wave impulse from 88.14 was completed at 94.98 (coupled with bearish divergence on the daily macd), however, the fact that price has then rebounded strongly from 88.15 after failing to penetrate 88.14 means that a broad range of 88.15-94.98 should contain the usd/jpy's move in the near term.

A more bullish outlook would only assert itself if the dollar can rise back above 94.98, the fall to 88.15 would be labelled as some sort of B-wave (or even X) and the next rise would be complex as the greenback continues to retrace the medium-term downtrend and targets chart resistance at 97.78 (close to 50% retracement of the downtrend from 110.67 to 84.82 at 97.74), a close above there would see a re-visit of the psychological 100.00 level later this year.

The daily chart shows a three-legged reversal from 84.82 to 93.76 with this move to be labelled as an A-leg (a: 84.82-90.77, b: 87.36 and c: 93.76) and the B-leg fall from there continues to unfold. If the dollar is able to penetrate 97.78, the eventual upside objective will be the major chart resistance and 2009 high of 101.45.

Dollar’s bearish outlook seen in the second half of 2009 would only be reinstated on a sustained move below 88.14/15, as this would indicate the 5th wave diagonal triangle from 124.15 (wave 4 triangle from 1995 low of 79.70 ended there in 2007) has resumed.