As stated in the earlier article on the USD/JPY, we saw a potential for the pair to bounce off the down trend channel. I was looking at this possibility or the flip side that is the pair going back into the channel. I know that the pair has not closed yet on the daily time frame. Right now at 9.46 am Singapore time, the pair is testing and trying to break above a downtrend line seen on the 1 hour and 4 hour time frame. I have put up the 1 hour chart below to show you how the pair is testing those levels right now and if that down trend line is broken, we can expect the price to shoot up back to the last resistance level at 79.676.
Anyway, below is the chart that shows price trying to break the down trend line on the 1 hour time frame.
I guess as all of you have known, the Greek elections came out in favor of the New Democracy, the pro bailout group and is favored by the market. This particular piece of data will allow usd/jpy to rise but do take note that the Federal Reserve meeting this Tuesday and Wednesday will come into focus again and will have a dampening effect on the USD/JPY. Traders are going to look at the possibility of the US dollars being printed in the billions again and hence is suppose to weaken the USD.
All right people, if this pair is going up, what can we project from here. If you are interested then head down to the chart below.
I took the last swing high and swing low from 77.65 and the last swing high at 79.75 and projected it upwards. If based on Elliot wave, AB is equal to BC, and taking B at the recent bounce off the daily trend line at 78.6, we will have price projections neatly at 80.6. I have 2 squares, one in red and the other in green. The red square I take into account the body of the candles and also the candlestick shadows while the green projections only takes into account the body of the candle. Using both ranges, the upside can be seen at 80.35 and 80.6. This coincides well with the resistance level at the 80.35 region which used to be support on the 16th of April and which has turned into resistance level on two occasions, on the 3rd of May and 16th of May. That will be our first target for the topside.
However people, if the 79.6 level is not broken as seen on the chart and which also happens to be the minor downtrend line, we might need to re analyze. If that level is broken, we might just have on the chart an inverted head and shoulders pattern and ain’t that nice for the bulls.
On the flip side, a break below the 78.61 will see the price moving fast to 78.0 and even 77ish levels. So manage your trades well if it goes against you.
Lets take one thing at a time but keep the above in mind. As traders we need to evolve and adapt to the market. Do not fight the market and manage your trades well. Manage yourself well.
All the best to your trading.
Singapore Forex Blog