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USD/JPY Forecast December 28, 2011, Technical Analysis

Under forex posted 2310 days ago.

By FX Empire.com

USD/JPY fell again on Tuesday as the market sold off the Dollar in an otherwise quiet session. The volumes are still light during this time of year as many traders will not be at their desks until after the New Year. The pair has been supported by the Bank of Japan over the last several months, and the selling of it can only be done with shorter term goals in mind. Having said that, the 80 mark above is where the real resistance is. Currently, it appears the markets simply cannot close above the 78.50 level in order to gain any real momentum to the upside.

The situation in the world economy does produce some demand for the US dollar, but the Yen has almost certainly not lost its “safe haven” status either. With this in mind, this is really an argument between two favored currencies at the moment. However, this standoff will not go on forever, and it should be noted that Prime Minster Noda was recently quoted as saying the Yen might actually be reflected the Japanese economy, a signal that intervention isn’t coming anytime soon. Either way, the pair will be very precarious to trade if you have anything more than a 3 day time horizon.

The pair needs to close over the 80 mark to show true strength to the upside. This would be a massive breakout, and the pair should continue to lift from that area. There simply has to be an amazing amount of short sellers in that area, and if they are forced to cover their positions, the rally would be fierce indeed.

The recent action is showing a bit of a triangle, suggesting that a run to that level could be coming soon. For now, it is simply suggested and not implied. The triangle has yet to break, and if it does break to the upside, it would be bullish, but one would have to be very concerned about the above mentioned 80 level as massive resistance. It is there where the fate of this pair will be decided. As far as selling, a break below the bottom line of this triangle would d have us shorting for about 100 pips or so.

USD/JPY Forecast December 28, 2011, Technical Analysis

USD/JPY Forecast December 28, 2011, Technical Analysis

Originally posted here


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