May 23, 2008 02:21

Technical Analysis – USD/JPY – Caution Advised

Posted In: Technical Analysis
By:

5-22-08

2:12a GMT – Mixed signals on the USD/JPY pair. Pair charged upward through resistance at 104.00 only to meet tougher resistance at 104.40 (the 68.2% Fibonacci retracement of the 105.4-102.7 drop). Pair bounced hard off that only to return to 104 and bounce off that as well. Two possible trend resistance lines were broken in yesterday’s upward charge but one remains (seen on chart below in blue). Bearish wick just bounced off this trend line making me lean toward bearish underneath it despite the upward pressure of 104.00.

Trading Idea: Mixed signals advise caution and to wait for a clear signal one way or another. I remain bearish under the blue trend line currently at 104.30. Beneath this look for 104.00 and 103.60 as targets. Above this trend line or off another 104.00 bounce look for 104.50 and then 104.90 as targets.

UPDATE – 6:19a GMT – To add to the mixed signals there is what appears to be a triangle consolidation pattern on top of the flagpole, which would indicate a bullish shoot upwards. Pattern and flagpole in yellow below:

Result: +70 pips

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