Previous: USD/JPY – 79.55 is the Next Pivot to Attack in the Bottoming Process (2/16)
USD/JPY
A bit of correction might be ahead for the USD/JPY as it it held under 80.00. The bull run has accomplished a break above the key pivot near 79.55, which was resistance in Nov. 2011, and also support during May and June of the year. The RSI in the daily chart was pushed above 70, a sign of bullish momentum, although in the short-term, it reflects overbought condition.
The 4H chart also shows overbought conditions, but there are no signs of slowing down just yet, except for the hanging man candlestick. However no significant bearish candles have followed and the market is basically indecisive as it looks for clues to either break through 80. Even the bearish outlook is very short-term at the moment. A rising trendline is the maximum expectation, somewhere at about 78.50 if price action does start to slide now. Only a break below 78.25 puts the bullish scenario to the side as it would reflect a choppy and sideways market even if the bias has turned bullish.
From the fundamental front, there aren’t many significant economic releases from the US or Japan. Remember this JPY weakness that started last week was caused by an expansion of Asset Purchase Program by the BoJ. The advantage USD has on JPY reflects the edge it has in its economic recovery. Therefore, while other USD and JPY crosses have been trading mainly risk sentiment, we may want to rely more on economic data when assessing USD/JPY.
Fan Yang CMT is a forex trader, analyst, educator and main contributor 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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BOJ is certainly concerned about its dwindling trade balance.. mainly because they have been importing more natural gas and coal to make up for the loss of nuclear energy.. The worse that the trade picture gets, the weaker Japan's current account which can create problems when it comes to servicing its debt load.. The poor 4Q GDP report certainly didnt help matters.. More BOJ injection should weaken the Yen, helping exporters.. So BOJ stimulates domestic economy and weakens its currency, so it definitely seems to be the strategy here..