Forex Technical Update

USD/JPY 1H Chart 1/14/2013 8:55AM EST

USD/JPY 1/14/2013 1H chart

Rising channel: The USD/JPY has been bullish since Jan 8, last Tuesday, rallying from 86.82 to 89.66 to start this week. The rally can be seen in a rising channel as shown in the 1H chart. As we begin the 1/14 US session, the USD/JPY has retraced a bit, back to where it closed last Friday, and also cracking the projected rising channel support.

Momentum: The downswing has not become a threatening signal against a very bullish USD/JPY. We know it is overbought in the medium term (ie. in the daily chart), but in the short-term ie. 1H chart, the RSI has fallen below 70 back to around 50, resolving overbought momentum. AND, if the 1H RSI holds above 40, the bullish momentum holds. A break below 88.70 support pivot with the 1H RSI falling below 40 would be a sign of a more significant correction, but just be aware that corrections in USD/JPY has been extremely rare since it started the bull run Sept. 2011.

Positive reversal: With no real bearish outlook yet, the bullish outlook remains focused on the current high of 89.66, and the 90.00 psychological handle above that in the short-term. In fact if the market does starting turning back up above 90.00 for example, there will be a “positive reversal“, which is when there is a higher price low corresponding to a lower RSI low. This shows that even though momentum has slowed, it is still bullish and suggests possibility of at least another swing in this time-frame, which should have 90.00 in sight.

Fan Yang CMT is a forex trader, analyst, educator and Chief Technical Strategist for FXTimes – provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.

Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis.

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