USD/JPY – Failure to Extend Leads to Possible Double Top
By Fan Yang | December 5, 2012 12:17 AM EST
Forex Technical Update
USD/JPY 4H Chart 12/5/2012 7:45AM EST
Breakout, failure: Last Friday (11/30), the USD/JPY broke above a flag pattern as seen in the 4H chart. Bullish momentum was preserved as the RSI held above 40 and pushed to 70. However, despite these signs of a bullish market, it failed to extend above the 82.83 November high. This failure is followed by a bearish swing so far and the USD/JPY is trading around the 82.00 handle to start the 12/5 US session. The RSI is at 40 again, a break below which would reflect loss of bullish momentum.
Double top? The failure reflects a market that is due for a bit of consolidation or correction. A push below 81.65 should complete a double top, and reflect more of a bearish correction rather than sideways consolidation, or coiling (triangle). In the double top scenario, a breakout projection targets the 80.50 area. Also note the 38.2% retracement (of the Sept-Nov rally) at 80.65, which is reinforced by a previous resistance pivot to be tested as support.
Bullish context: Failure to hold below 82.00, and a push back above 82.40 reflects a sideways, coiling type of consolidation. Whatever the structure ends up to be, the higher degree outlook remains bullish with the 2012-high 84.19 in sight. Only a break below 80.00 should suggest the bearish outlook.
Fan Yang CMT is the Chief Technical Strategist, trader, educator and a of the main contributors to FXTimes - provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.
Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis.
Most Popular Slideshows
- Manny Pacquiao Vs. Chris Algieri World Tour Kick Off Press Conference In Macau [PHOTOS]
- Prince Harry & Camilla Thurlow Getting Serious, St. Tropez Holiday Before The Prince’s 30th Birthday [PHOTOS]
- Top 5 Richest Tennis Athletes
- 2014 US Open Update (Day 4 - Men's Singles): Murray, Djokovic, Raonic and Isner Advance to 3rd Round [PHOTOS]
Join the Conversation
- Sept 19 iPhone 6 Release Date Confirmed as Apple Sets Sept 9 iWatch, 2 iPhones Intro - Report
- Nexus 6 Release Date Will Intro Android 5.0 aka Lemon Meringue Pie with Killer Specs & Features
- Hundreds of Men Rape Teen for Three Years
- iPhone 6 Release Date Update: 4.7-Inch Model Scores 65.8% In Screen-To-Size Ratio; A Surprise Entry Scales Top Spot [List Attached]
- Product Recall Alert: Hewlett-Packard Pulls Out 6M Power Cords from US, Canada Over Fire Hazard Concerns, Australia Also Affected
- ISIS Wants $6.6M and Release of Aafia Siddiqui in Exchange of Head of Female US Humanitarian Aid Worker, 1st American Fighting for Jihadis Dead
- Ukraine Ceasefire Looks Remote As Putin Talks Tough At Meeting With Poroshenko