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July 4, 2017
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July 5, 2017

The USDJPY is at an important crossroad. Any pull back from current levels is justified for the short-term but could also be seen as a false break out above the medium-term resistance trend line.

So far on a monthly basis the USDJPY is respecting the monthly Kumo (cloud) support and has bounced off it. Will it do the same and start a new up trend towards 127 or will it reverse from current levels for a new downward move towards 94?

As long as price is above 110-111 bulls are safe. A monthly close below 111-110 will open the way for a push lower towards 101 at least.

If USDJPY is about to make a similar leg down to the decline of 125-99, then we should expect a reversal from current levels and a move towards 94-92. If on the other hand we manage to hold above the monthly cloud support, a sequence of higher highs and higher lows will show us the way towards 126 at least.

In the short-term price is trading inside a bullish channel and has broken above the 112.50-112.80 resistance trend line. So far we have seen one successful back test of the broken trend line and price remains above both the tenkan- and kijun-sen indicators.

A break below 112.60 will be the first reversal signal. Short-term weakness should be expected if we also break 112.70. So 112.60-112.70 is important for short-term traders. As said above, 110-111 is the support area bulls should hold. Breaking below it will open the way for a test of 108. Breaking 108 will strengthen the bearish scenario for 92-94 USDJPY.

Thank you for taking the time to catch up on my thinking.

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.