Previous: USD/JPY Extends Breakout with Bullish Momentum (10/22)
USD/JPY 1H Chart 1:15PM 10/24/2012
Triangle Congestion: The 1H USD/JPY shows market holding under the 80.00 clip consolidating in a triangle pattern. The support is at about 79.70. Even though there is a declining resistance, a true breakout for further bullish extension probably requires clearing the 80.00 psychological hurdle. On the other hand a break below 79.65 could lead to at least some very short-term bearish correction. The RSI is still holding above 40, a sign that the bullish momentum is still maintained as price holds above 79.70. Will there be a continuation, or first a correction?
Correction scenario: A correction, where price is reverting to the mean has a target of 79.20 at the moment, where the 200-hour SMA resides. When you look at the daily chart below, 79.20 is also a previous resistance pivot and September high. A more aggressive retracement has the 78.85-79.00 area in sight. This includes the 38.2% retracement of the Sept-Oct. rally so far, as well as a couple of minor resistance pivots.
Continuation scenario: If the trend since September continues, then the next resistance area to monitor is around 80.60, this was a support as well as resistance pivot. A more aggressive target would be the origin of the falling (dotted) trendlines seen in the daily chart, which was at 81.75.
USD/JPY Daily Chart 1:20PM 10/24/2012
Fan Yang CMT is the Chief Technical Strategist, trader, educator and a of the main contributors to FXTimes – provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.
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