USD-JPY: Lower Levels Seen

On the whole, USD-JPY remains vulnerable to the downside as long as it continues to trade and hold within its established falling channel.
By Mohammed Isah ,

USD-JPY: While USD-JPY remains trapped within its established falling channel, risk remains for a retest of its strong supports located at the 86.16 level, its December 2009 low and the 84.89 level, its November 2009 low.

Although December 2009 saw the pair rallying sharply higher to reverse its November 2009 losses, price action in Jan 2010 had reversed half of those gains and threats are now seen targeting further downside pressure.

We maintain our bearish outlook on the pair, which is premised on its clearly established medium-term downtrend and the fact that USD-JPY had been trapped in a falling channel for many months. If the levels highlighted above give in, USD-JPY will face additional weakness toward the 79.75 level, its April 1995 low.

Its weekly RSI is bearish and pointing lower, supporting this view. The risk to our analysis will be a break above its falling channel currently at 92.66, with a hold above that level expanding further gains toward its January 2010 high at 93.74. Beyond there will clear the way for a further up move toward the 97.78 level, its Aug 2009 high. On the whole, USD-JPY remains vulnerable to the downside as long as it continues to trade and hold within its established falling channel.

Mohammed Isah is a technical strategist and head of research at FXTechstrategy.com, a technical-research Web site. He has been trading and analyzing the foreign exchange market for the past seven years. He formerly traded stocks before crossing over to the forex market, where he worked for FXInstructor LLC as a technical analyst and head of research before joining FXTechstrategy.com. He has written extensively on the forex market and technical analysis and his articles have been featured in The Technical Analyst Magazine, The Forex Journal Magazine, The International Business Times and FXstreet.com. At FXTechstrategy.com, he writes daily, weekly and long-term technical commentaries on currencies and commodities, which are offered to its clients. He also produces

The Professional Suite

for his subscribers. He provides full coverage of the forex market with specific focus on G10 currencies as well as the commodities markets, with focus on five key commodities.

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