USD/JPY Bulls Straining at Their Leash

The FX Trader’s view - Last November saw a bear break that, in the end, amounted to a type of blow-off move, with subsequent quick recovery putting the bulls in contention once more. However, there were key resistances to overcome, and one of which has just been violated…

• MONTHLY CHART: In the Commodity Specialist Guide we have this year continued to note an interesting positive RSI divergence on the Monthly chart, suggesting that long term bears were tiring.
• WEEKLY CHART: On the Weekly chart note the clear falling resistance line, providing a cap on action in 2010. This follows the false break below old 87.11 support. This line, running through 91.70 currently, was violated yesterday (although a weekly close above this would be preferable), and now a further recovery past the 93.76 early Jan high would confirm a new bull trend was underway.
• DAILY CHART: This year’s slip back found good support from the 61.8% retracement, coinciding with the early Oct-09 low just under 88.00. In the FX Specialist Guide we have said that a recovery/close above the 92.14 19-Feb high would provide an initial bull signal (just seen yesterday), the second being the continuation above the 93.76 Jan high. A target area opens up – an equality target just above 97.00 (Nov-Jan upleg extended off 88.10 Feb low), the 76.4% recovery level around 97.50 and higher Fibonacci projection at 98.75. At this stage a drop back and close below the 90.00/89.75 area would negate the current s/term positive picture.

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