USD/JPY 1H Chart 10:00AM EST 11/5/2012
6-month high: Following up with the previous update on USD/JPY, we see the pair coming off a 6-month high after rallying to 80.66. It ended the week and starts this week (11/5) with a throwback that broke below a rising trendline that has held price action bullish since October 30.
Momentum: The bullish momentum in the 1H chart is being tested as the RSI hangs around 40. A break below 40 reflects loss of momentum, while holding above it shows maintenance. A break back above 80.36 with the RSI also pushing above 60, would be an early sign of bullish continuation, but perhaps we are in for some consolidation before this scenario.
Bearish divergence: The daily chart is showing some bearish divergence. This does not always follow with a reversal, but it is a sign the that market is slowing down as it becomes overbought in the short-term.
Retracement targets: If there is a bearish correction to the recent rally, 50% of the latest swing goes back to 79.97, around the 80.00 handle. The 200-hour SMA is near as well, around 79.90. Holding above this would suggest bullish intent.
There is a pivot area around 79.20-79.25. A break below this shelves the bullish scenario for at least a sideways range-bound one with focus toward the lows in the 77-78.00 area.
I think USD/JPY can continue to be bullish in the longer term, but there can be some violent twists and turns as it attempts to come off a bottom around the historic low of 75.65.
USD/JPY Daily Chart 10:05M EST 11/5/2012
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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