The USD/JPY has been very sharp, without significant correction to offer new buying opportunities on a dip. As we near 83.00, the market could be in exhaustion. The daily chart shows the price at an expanded upper bollinger band (3 standard deviation of the 200SMA). This a sign of a strong market going into the medium and possibly long-term (through 2012).
For the short-term however, we can be looking for a developing of a top. It is still too early to say because USD/JPY has continued to add higher highs and higher lows and continuation to 83.00 is very well in the scope of things. However, the 4H chart shows a possible wave count for an ending diagonal triangle. The development of the 5th wave suggest a scenario of topping coming up soon. The acceleration can be interpreted as a throw-over exhaustion before a correction. The first target for this counter-trend outlook would be the 81.00 pattern support.
Then if USD/JPY does top off and fall below the pattern support a possible target in the short-term is the 80.00 handle. In fact the 79.50-80.00 area could be seen as a potential area for renewed buying.
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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.
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.