USD-JPY Set to Resume Downtrend

The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

NEW YORK ( fxtechstrategy.com) -- Although USD-JPY continues consolidation, it remains vulnerable to the downside while it holds below the 77.85 level. This leaves downside risk toward the 2011 low of 75.92 and beyond.

The pair has been under a strong bear pressure since topping out at 124.13 in June 2007. With that downtrend remaining intact, a convincing violation of 75.92 will set the stage for further weakness toward the 74.00 level.

Further down, support stands at 73.00 and then 72.00, representing psychological levels. Its daily RSI is bearish and pointing lower suggesting further weakness.

Alternatively, the pair will have to break and close above the Aug. 4 and Sept. 9 highs of 77.85 and 80.19 levels to change our bias and reduce its bear threats. This will create scope for further gains toward the July 8 high of 81.47 and subsequently the 82.21 level.

All in all, USD-JPY remains biased to the downside in the long term as it looks to resume that trend.

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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