USDJPY Set For New Highs (D,W)
Created on Wednesday, 13 May 2015 06:11
Written by Austin Galt
Let’s check out the technicals of the USDJPY as there looks to be a low risk opportunity to go long and ride the move up to new highs.
USDJPY DAILY CHART
Price appears to be in consolidation mode while trending up marginally. As long as recent support holds then I favour prices trading higher. This support stands at 118.32 and is denoted by the horizontal line. Breaking below here would eliminate the bullish scenario in my opinion. At least in the short term.
The Bollinger Bands show price bouncing up and down between the upper and lower bands which is testament to the consolidation in play. I think price is headed back to the lower band one last time before price surges to new highs. The lower band is currently around 118.60.
The PSAR indicator is also evidence of the consolidation going on with the dots being busted every which way. Price is now down at support with the dots just below but I think price will bust the dots in one last little fake out move before resuming higher.
The RSI appears headed into oversold territory so perhaps a price rally is just around the corner.
The Stochastic indicator has a bearish bias which lends credibility to price moving lower over the very short term.
USDJPY WEEKLY CHART
We can see price is actually in a solid uptrend with price consolidating for the last 5 months. Perhaps price is ready to launch higher again.
I have drawn the same support line to provide another perspective and that is my line in the sand. As long as that support holds I remain bullish.
The PSAR indicator has a bullish bias with the dots underneath price. These dots currently stand at 118.40 and will likely be just below 118.60 next week. I expect price to test this support and obviously hold if the bullish scenario is indeed the one to bet on. Perhaps a low around 118.75??
The Stochastic indicator has a bullish bias while the MACD indicator has a bearish bias but it is looking long in the tooth.
From previous analysis, we know a double top against the trend is in place at 122.01 so the odds are price will crack above that level. The only question is when.
Summing up, there appears to be a low risk opportunity to get long the USDJPY. If support holds then we can analyse potential levels for the rally to end. On quick inspection I would be targeting above 124 but let’s leave that aside for the moment.