By Mohammed Isah of fxtechstrategy.com
: Although the dollar-yen currency pair still retains its broader short-term recovery started from the 84.80 level (the 2009 low), it now faces further downside weakness after cutting through a congested zone (91.84/56) on Friday.
In such a case, we are looking at 91.94/46, where the daily exponential moving averages and the .50. Fibonacci retracement (84.80 - 94.76) are located as the next likely target.
We expect this support zone to hold and turn the pair higher in the direction of its short-term uptrend.
However, if that zone breaks, we might see a price extension towards the .618 Fibonacci retracement at 90.67.
The dollar-yen's daily stochastics and relative strength index are bearish and trending lower, supporting this view. Alternatively, the USD-JPY must break and close above the 93.74 level, its Jan. 7 high, to reduce its current downside pressure and bring gains toward the 94.76 level, the 2010 high, and then 97.77, the August 2009 high.
A break through the latter level will expose the 101.43 level, the April 2009 high. All in all, the dollar-yen faces the risk of further downside toward the 91.94/46 levels, having maintained a bearish corrective tone.
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
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.