Technical Trading Tips and Techniques by 
(Please click on the accompanying chart to enlarge.)
As of this writing very early on Friday morning (New York session), price on the USD/JPY daily chart, as shown, has once again reached significant support around the 108.50 level. As noted two days ago on this blog (click here), a breakdown of this strong support should target further support to the downside around the 107.30 region. Price is still showing a rough head-and-shoulders pattern, so a clean breakdown of the 108.50 region would roughly correspond to a neckline breakdown. If, on the other hand, support is respected, a strong bounce should target the top of the pattern (around 110.60) once again.
- 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.
the head and shoulders isn’t ideal in this case..and the overall bullish channel is still intact (connect march and july lows and copy the line to connect late april and mid june highs). have to admit that a neckline break of the above mention pattern still has enough room to develop to the support trendline.
Hi Bogdan!
Thanks for your comment! Yes, absolutely, I agree it is not an ideal head-and-shoulders - that is why I keep calling it “rough.” And yes, I saw that trend channel you mention, but I didn’t actually draw it because the support aspect of it (the bottom line) does not yet seem valid enough until there is another touch that respects it. I made this judgment call because of the fact that for most of the channel, price lingers way above that support line. So for now, I am viewing the mid-July touch as an anomaly. This view would change if we see another bounce off this line. Thanks, Bogdan!
- James
Nice presentation of the chart and very timely too.
The effects of today’s fall in the USD/JPY are limited in taking the US Dollar lower, as the EUR/USD, and the EUR/JPY fell as well.
Oil and gold are stabilizing, as the US Dollar and Gold, are in a struggle of their life for supremacy and sovereignty as the global ruling currency.
One thing that is helping gold now is the shortage of physical gold at coin dealers and jewlers worldwide.
We are on the verge of an epic investment shift: gold is soon going to arise as the defacto world currency and means of garnering and accumulating wealth.
The struggle between the US Dollar, $USD, DX, and gold, $GOLD, GLD, will soon be over — gold will arise supreme and the dollar vanquished.
Thanks for your very informative comments, Richard!
- James