USDJPY in downward correction

S&P false breakout or slow start?
July 2, 2013
Bullish trend supported in SPX
July 6, 2013

After a steep rally from 94 to 100.86, USDJPY has broken today the upward sloping trend channel. This signals the end of the upward move from 94 and the start of a downward correction. How much and how steep prices are going to fall, will also determine the degree of the correction to come.

USDJPY

Prices are falling in an pattern and we believe that we have seen the short term top in this pair. We expect prices to continue lower towards at least the 98 price level.

USDJPY4H

The above chart shows the potential bottoming targets. The Fibonacci retracements at 50% and 61.8% levels are the most possible targets where this pair will find support. If however prices fall below the 76.4% support, the bullish scenario will be in danger as the possibilities of a larger degree correction will have increased. If prices manage to break below 94, this bearish scenario will be confirmed, with targets as low as 92-93 where the longer term upward channel provides support.

USDJPY6H

The longer term upward channel has support at 92-93 level. If prices now break below 95.37, there will be increased chances to break below 94 and then reach 92-93. For now we prefer the bullish scenario that sees only a small correction towards 98-97 and then up again.

As always, thank you for taking the time to catch up on my thinking.

impulse-wave-rules

Alexandros Yfantis
Alexandros Yfantis
Fascinated by financial markets, studied International Securities Investment and Banking in the UK, works as a Portfolio Manager in Greece and runs a technical analysis website. Enjoys travelling and spending time with his family and preparing for the black belt in Korean Karate.