What Is Next For USD-JPY?

By: Mike Kulej Two weeks ago, the US Dollar dropped to an all time low against the Japanese Yen, reaching 76.12. It did not stay there for long, rebounding immediately. A couple of days later a coordinated intervention by central banks pushed it higher. This could have been an exhaustion move in a long-term bear market. During the last few days, the USD-JPY made additional gains, rallying to 84.72 on Friday. In the process, it breached an important resistance of 84.50, established by a high (B). That happens to be latest minor high within the downtrend, the highest point between the last two lows (A and C). Moving through this resistance makes a strong argument for a major trend reversal.

For that, however, we need to see a close above 84.50, something what the daily chart of the USD-JPY failed to do so far. The recent price run up has been so fast, that it could be overbought on short-term bases, as suggested by the Stochastic Indicator. A slight pull back or a consolidation is very likely now.

Looking a little farther ahead, 1-2 weeks or so, the newly forming uptrend should continue. The ADX is rising, but at a reading of 34 is not overbought or overextended – that comes at above 50. If the price moves back above 84.50, we could see a real bull market, taking to USD-JPY to 88.00 and perhaps even 90.00 within weeks.
http://www.dailyforex.com/forex-technical-analysis/2011/04/What-Is-Next-For-USD-JPY/7600