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Chart of the Day - 3/26/2008 - USD/JPY
3/26/2008 – USD/JPY – At least two technical factors are hinting at a further impending bearish move in the key USD/JPY daily chart, as shown. First, and perhaps most importantly, after the pair broke down below the bottom line of the long-term parallel downtrend channel (which began about a year ago) price retraced back up to the line and then dropped back down again within the last couple of days. This can be seen as a classic breakdown-pullback-continuation formation. Of course, this pattern would not be complete without a breakdown below the last low at around the 95.75 region. The second technical factor contributing to a bearish outlook is the fact that the recent price consolidation has appeared to form the approximate boundaries of a triangle, or possibly pennant, pattern. And as these types of patterns are often seen as continuation formations, this is another possible indication of continued downward momentum. One other interesting note on the current chart is that the pullback move went up to and promptly retreated from the key 38.2% Fibonacci retracement level (the high-to-low retracement range being measured from the last swing high on 2/14/2008 to the recent long-term low on 3/17/2008). In the event of an impending downward continuation, the next major support to the downside resides in the region of the recent long-term low around 95.75. James Chen Chief Technical Analyst 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; downtrend lines in red; chart patterns in yellow; 50-period simple moving average in light blue.)