USD/JPY at the Cusp of a Bullish Breakout

by Admin

USD/JPY 1H chart 2/20/2013 10:16AM EST


Consolidation Channel: The 1H USD/JPY chart shows a pair that is trading in a consolidation channel after a bullish swing from 92.23 to 94.20. It should be noted that in this time-frame, there is no clear trend. The moving averages are flat or whipping across each other. The RSI swings from 30 to 70 to almost 30 and thus does not show maintenance of momentum in any direction.

Bullish breakout:
Still, the latest swing was a bullish swing, and price is now testing the consolidation channel resistance, at the cusp of bullish breakout. A rally above the consolidation channel resistance along with the RSI clearing above 60 should be a sign of another bullish swing development. Taking the previous swing, the projection would be to about 95.05. The 95.00 handle is also the 2010-high, and a level to expect some resistance.

Failure to break from consolidation keeps the market guessing even more. The bearish outlook however should be shelved until a break below 92, 91.80, after which we would have topping action, and be more confident of a bearish correction.