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(Please click on the accompanying chart to enlarge.)
After the dollar rally of last week, are we finally experiencing a respite in the strong breakout moves on the majors? The USD/JPY, a daily chart of which is shown, has approached and stalled around clear resistance on the bottomside of the uptrend line that began in March. This line originally served as support and should now serve as resistance going forward. Oscillators like the displayed Stochastics, which are well in overbought territory, are also finally pointing down again. In the event of a correction to last week’s upmove, the 108.50 region should continue to serve as support to the downside.
Update: As of early Monday afternoon (New York session), the dollar has firmed and once again approached resistance imposed by the uptrend line. Support and resistance as outlined above are still in effect.
- James
James Chen is the Chief Technical Analyst at FX Solutions, a leading Forex broker. He is also a registered Commodity Trading Advisor (CTA) and a Chartered Market Technician (CMT) Level 3 candidate. At FX Solutions, Mr. Chen writes daily currency analysis, conducts forex trading seminars, and has authored numerous articles on currency trading and technical analysis for major financial publications. His upcoming book, Essentials of Foreign Exchange Trading (John Wiley & Sons), will be released in early 2009.
Hi james,
Do see any correction on USD/JPY towards 107.80 and 106.00 and sufficent bounce in EUR/USD in comming two days ,thanks
Hi St_fx,
Thanks for your questions. Yes, I see both a potential correction in USD/JPY (but maybe not quite yet all the way down to the levels you mentioned), as well as a potential bounce in the EUR/USD in the coming days. The big question is how big this correction and bounce will be. I am watching these pairs very closely, and will give updates and alerts as I see changes occurring. Thanks again, St_fx!
- James