Forex Trading: USD/JPY Consolidates During Bearish Onslaught
Written on July 13, 2011 by Julia Woodard
USD/JPY (4-hour chart) as of Thursday (7/14/2011) has entered into a consolidation after having broken down decisively below the key 79.50 previous support region (now resistance). The breakdown below 79.50, which was the region of the significant May low, was also a breakdown below the 161.8% Fibonacci extension of the last major bullish correction, and it also follows on the heels of a breakdown below a key parallel uptrend channel that extends back to the early June low. This series of breakdowns highlights the substantial recent weakness in the pair. Now that 79.50 has been broken down, it has already acted as resistance, and continues to serve as a key resistance area. To the downside, the 261.8% Fibonacci extension of the last major bullish correction (around 78.30) has been approached but not yet reached. In the event of a further breakdown below this level, price action could begin targeting further downside support around the 76.50 price region, which represents the approximate bottom of the bearish spike that occurred in mid-March.
James Chen, CTA, CMT Director of Technical Research and Education FXDD
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