Technical Analysis from FXMars


May 5, 2014

The price did a bullish break through the three times tested resistance at 1.38500 and it got out of the horizontal corridor it has been following for the past two
weeks. Currently, the price is following another, bullish corridor, which walked the price through the upper level of the symmetrical triangle, which lower level is
the bullish trend line from September, 2013. The current bullish movement of the price is in a convergence with the Stochastic Oscillator, which movement could also be
followed by a bullish corridor. Now, after we have the price above the upper level of the symmetrical triangle, it is likely for the price to seek new, higher tops.
For this reason, the first resistance the price would probably meet is the red line at 1.38891, which indicates the last top of the price. If the price manages to
break this level, we could seek a further interaction with the 0.00% Fibonacci level and an eventual break through this level.

On the D1 chart the Yen gives some controversial signals. The first thing we notice is the double bottom formation, which bottoms lay on the pink bullish trend line
from April, 2013. Also, with crossing the 102.749 resistance (also a neck line), the price confirmed the formation, which speaks for an eventual upcoming bullish
movement. On the other hand, there is a clear bearish divergence between the price and the Stochastic Oscillator (blue lines), which contradicts to the already
confirmed double bottom formation. The last bottom from April, 28 sent the price in bullish direction, and a top was created on Friday. The controversial here is that
this is the second top from the divergence between the price and the Stochastic Oscillator. Moreover, the thick red lines on our chart indicate a triangle with a
bearish potential. If the price breaks through the upper level of this triangle, the triangle and the bearish divergence could be considered as fake and we could start
following the already confirmed double bottom formation, which has a potential to meet the price with the upper level of the symmetrical triangle from the beginning of
January and with the blue resistance from May, 2013. The other possible scenario is the bearish one. If the price breaks through the purple bullish trend from April,
2013, which is also the lower level of the bearish triangle, we would have a confirmation of the divergence and we might see the price testing the 101.317 support,
which indicates the bottoms from February 17, March 3, March 17 and April 11.

The cable is still moving in the rising wedge formation from April 10, and it even broke the 1.68355 resistance, which indicates the tops from February 12, April 10,
April 17 and April 22. In addition to the rising wedge formation, which as we all know, has bearish potential, we also have a bearish divergence between the chart of
the price and the Stochastic Oscillator (blue lines). While the price was hitting higher tops, the Stochastic Oscillator was demonstrating a slight bearish movement,
which could be the key answer to the to the question “Where is the cable going?”. If a break in the lower level of the wedge occurs, we could seek a drop at least to
the first bottom of the wedge, which is located on the green straight line at 1.66650. If this happens, this could also mean a break in the lower level of the blue
bullish corridor from the end of September 2013.