Forex − Chart USD/JPY: Still base building, completion seen into Q4
International Trading
THE TECHNIQUE OF GIVING A GOOD MASSAGE
14 years ago
Monday, August 23, 2010
, Posted by Usman Ali Minhas at 3:12 AM
Published at 23 Aug
DOWN MOMENTUM FADING TOWARDS NOV 2009 LOW, STILL CONSISTENT WITH BASING (Ref. rate 85.35)
USD/JPY has further extended its drop back from the May high, but this latest weakness has lost downward momentum near the November 2009 low. Furthermore, we still see overall activity as consistent with base development. While some additional decline cannot be discounted, we do expect any such losses to stay contained within this formation. Currently completion of this base is not expected in Q3, though a more bullish picture should emerge into Q4. Above 90.00 would signal a distinct improvement in the pattern, with later clearance of the mid area of the December/June trading area at 91.50 confirming that completion is near. Above the May high, the base is finished.
Support is at 84.87/71, the 19 and 11 August lows, which are in the area of the November 2009 low at 84.81. At present this area is still expected to hold. However if it does give way, look for a further decline to 81.77, June 1995 low, and 79.70, April 1995 low.
To the upside, resistance is in the band from 86.25, 16 July low, to 88.11, 28 July high. Above here would signal demand strengthening and a test of 89.15, 12 July high. Once this is cleared, the recent lows will be proved firm, with a test next through 90.00/03, figure and 38.2% May/July fall, and 90.98, 50%, to 91.50/92, the midpoint of the overall range in force from 18 December 2009 to 1 July 2010 and 61.8% retracement. A quick test of the next resistance areas at 92.11, 14 June high, 93.64, 13 May high, and 94.98, 4 and 5 May highs should follow, then 95.10, 61.8% of the 2009 fall. Above this area, which is still in focus over the next 2-3 months, a base area is complete. Next levels are then 97.78/98.88, 7 August and 5 June highs, and 99.72, 7 May high, 100.00, figure, and 101.45, 6 April 2009 high.
Although USD/JPY has seen a deeper reaction than was anticipated in May, we still see activity as base building. Over Q3 and into Q4 we expect losses to stay limited, with a firmer phase developing. A clear break of the May highs to confirm completion of a base is also expected into Q4.
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