-
Chart of the Day - 1/14/2009 - USD/JPY
1/14/2008 – USD/JPY – Benefiting from investors’ risk aversion, both the U.S. dollar and the Japanese yen have seen substantial gains within the past several days. When compared head-to-head, though, the yen has fared significantly better, as shown on the accompanying USD/JPY daily chart. After having broken out above a key downtrend resistance trendline in the very beginning of the year, price action hit a swing high to 94.60 last week before plummeting towards the recent 13-year lows in the pair (around 87.15). These lows have not yet been retested, but price has been quickly approaching them. In the meantime, the pair has pulled back to the above-mentioned downtrend line that it broke in the beginning of the year. At this point, a substantial break back below this trendline appears to be a very likely possibility. This should be the case even though price is technically well oversold. If a strong break occurs, immediate downside support should be in the region of the long-term lows around 87.00, while upside resistance in the event of a corrective bounce resides around the key 91.00 support/resistance region. James Chen Chief Technical Strategist FX Solutions IMPORTANT NOTICE: These comments are for information purposes only. The information contained on this document does not constitute a solicitation to buy or sell by FX Solutions, LLC., and/or its affiliates, and is not to be available to individuals in a jurisdiction where such availability would be contrary to local regulation or law. Opinions, market data, and recommendations are subject to change at any time. Forex trading involves substantial risk of loss and is not suitable for all investors. (Chart courtesy of FX Solutions' FX AccuCharts. Price on 1st pane, Slow Stochastics on 2nd pane; horizontal support/resistance levels in yellow; uptrend lines in green; downtrend lines in red; 50-period simple moving average in light blue.)