USD/JPY - Long Term Forex Market Analysis

USDJPY stays in a falling price channel and remains in downtrend from 93.75. As long as the channel resistance holds, we'd expect downtrend to resume and one more fall to 88.00 to reach next cycle bottom on daily chart is possible next week. However, a clear break above the channel resistance will indicate that a cycle bottom has been formed and the fall from 93.75 has completed, then bounce to 92.00-92.50 area could be seen to follow.

For long term analysis, USDJPY has formed a cycle bottom at 84.82 level on weekly chart. Bounce towards 100.00 area is expected after consolidation.

EUR/USD - USD/JPY - GBP/USD

INTRA-DAY USD/JPY

Range Forecast
+89.65 / 90.00+

Resistance/Support
R: 89.89/90.05/90.15
S: 89.57/89.25/88.82

INTRA-DAY USD/JPY

Range Forecast
89.65 / 89.95

Resistance/Support
R: 90.15/90.26/90.58
S: 89.78/89.53/89.25

USD/JPY - Technical Analysis

The daily chart shows the pair has broken its downward sloping trend line that began on January 7th. The correction is measured at 2.7% of the previous trend. Further signs of a bullish correction appear on the MACD. The histogram is on the verge of breaking the 0 line, along with a potential bullish cross forming, indicating a potential rise in the price. Traders may want to wait for the correction to measure above 3% on a closing basis and then go long on the pair with a take profit level at 90.70.

JPY - Yen Drops against the Majors

The Yen's bullishness was halted yesterday, as the Yen dropped against all the major currencies. The Yen fell 80 pips against the Dollar, over 200 pips against the Euro and about 250 pips against the Pound.

Recent speculations regarding a Euro-Zone rescue plan for Greece have reduced demand for the Yen. Optimism regarding a potential Greece rescue have revived demand for higher-yielding assets, and weakened the Yen. In addition, a Chinese stock rally has helped to reduce risk aversion, driving investors to buy back riskier currencies such as the Euro and the Pound. It currently seems that as long as the Euro continues to strengthen due to optimism regarding the Greek economy, the Yen is likely to drop further.

Today, Japanese banks will be closed in observance of National Foundation Day, and low liquidity is likely to take place. Traders are advised to follow the leading publications from the U.S, especially Bernanke's speech, as this is likely to impact the market the most today.

INTRA-DAY USD/JPY

Range Forecast
89.65 / 89.95

Resistance/Support
R: 90.07/90.58/90.88
S: 89.57/89.32/89.15

USD/JPY 89.72 - 9 February 2010

USD/JPY Open 89.24 High 89.73 Low 89.12 Close 89.23

Dollar/Yen is moving still within the well formed downward channel on the 1 hour chart. This week, the currency couple is trading hesitantly, testing the upper limit of the bearish channel at around 89.73. Persuasive break above that level may lead to direction change and strengthen the Dollar further towards next resistance level 90.50. The closest support is Monday's bottom at 89.11. Going bellow that level would confirm the bearish outlook and may give the bears further advantage towards 91.06. Prices are currently above the 50 and 20 EMA, signaling for possible intraday appreciative adjustment, which is not expected to interrupt the continuation of the bearish trend in the longer term. The RSI indicator is in the overbought zone, MACD is slightly rising, while CCI is also overbought with decline on the 1 hour chart. Overall, indicators give mixed signals for the pair.

Technical resistance levels: 89.73 91.06 91.80
Technical support levels: 88.83 88.30 87.39

Trading range: 89.85 - 89.20
Trend: Downward
Sell at 89.72 SL 90.02 TP 89.32