Looking at the charts, it is clear that USD/JPY is in a downtrend. The Japanese are worried sick actually of the way the Yen is strengthening as the impact on the exports is not helping the Japanese economy.
Looking at the chart above which is on the 4hour time frame, the pair is now going through a correction. There is no indication of a trend change yet.
Correction to the upside is possible here, targeting pivot point level, 85.06 after the pair broke above 84.22 which is the pivot point.
The MACD histogram is forming a rounded bottom and if it pierces through the zero line to the upside, things will look better for the USD.
We can also see a Stochastics crossover, indicating a more bullish momentum for the pair.
We can see a Three Inside up pattern on the chart right now. This is a bullish pattern.
The pair is still trading below the 15ema. We need to go above that for a confirmation that the bullish correction will ensue.
21 EMA Channel (Purple Channel)
The pair bounced off the purple channel and is now facing resistance on the 15ema.
The pair might consolidate between the 15ema and pivot point for the next few hours.
USD/JPY Analysis Update on 1st September 2010 11.23pm Singapore Time.
USD/JPY chart analysis on the 4 hour chart
This is an update of the USD/JPY chart analysis on the 4 hour time frame. We can see a “Bullish Engulfing” candle being formed on this chart. That candle has even formed a long bottom shadow in its wake, indicating some strong buying interest from the Bulls. Other bullish indication includes the candle piercing through the 15EMA and is now sitting on the 15ema, contemplating the next move to go above the R1 pivot point level at 84.60. If the bullish momentum continues, I would expect the pair to trade up to the 85.0 level.
The MACD histogram is also inching up and turning green. We need to see more green bars and the green bars getting longer to give us more reason to go long. Also, take note that there is a higher swing low formed at 84.045, compared to the previous swing low at 83.98. This indicates to us that the bulls have more or less taken some control over the pair for a corrective move upwards.
If the price closes below the 83.90 level, abandon all long views on the USD/JPY.
Ardy is a Professional Forex Trader specializing in the Forex market. He trades using both Technical and Fundamental Analysis and mentors other traders how to trade the Forex market using proprietary trading strategies which he has developed over the years. He started investing in equities in 1999 and trading Forex in 2008. He is the founder and lead currency strategist @ Forexachievers.com