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USD/JPY Bulls Pause for Thought

15 January 2010


The FX Trader's view -




MONTHLY CHART: In the FX Specialist Guide we have started to look at a positive divergence on the monthly RSI indicator now visible - the implication is that long term bear enthusiasm is on the wane.




WEEKLY CHART: The break below the 87.11 lows was deceptive - but such false breaks can be turned to advantage.

Note that key long term falling resistance is currently around 93.80, and a decent Weekly close above this would provide a further bull signal.



The break above the 90.76 04-Dec high and bear channel top projection supported our thinking that bears had enjoyed a blow-off finale in Nov.

S/term resistance around the 50% recovery level has been seen, but we view s/term weakness as probably temporary ahead of another bull attempt.

First support from that 90.76 high has come under pressure today - below this note in particular the 88.23/87.96 support area, 61.8% pullback and Oct low.

It is unclear if losses can extend to the lower 86.92 76.4% level. A subsequent break above the 93.76 08-Jan high (and, therefore, above long term falling resistance on the Weekly chart) would next turn our focus on the 95.10/50 area, 61.8% recovery and Fibo projection.



Philip Allwright

Mark Sturdy

Seven Days Ahead


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