By: Mike Kulej
The major down trend in USD/JPY continues. Earlier in the week, this pair made another 15 year low at 83.34 and large-scale charts show no signs of a trend reversal yet. However, on smaller time frames the Dollar appears to be regaining some strength. Is it for real?
We should find out soon. Over last couple of days, the USD/JPY moved up in a relatively orderly manner, looking a possible start of a reversal. This will be put to a test soon. On a 4H chart the price is approaching a minor trendline (A), drawn from the 85.90 high. With the rate of the USD/JPY now above 84.00, this trendline should be tested in the 84.40-50 area. If this is broken, the next obstacle is not far above, at approximately 84.90-85.00 level. That is the major trendline (B), plotted from the July high of 89.10. Only when both of these trendlines are broken, the trend can be considered changed.
In addition, other technical indicators should confirm the price action. For example, the MACD should at least the zero line. One could also argue that the smoother trend on a Three Line Break Chart must be breached as well. For now, the USD/JPY remains in a downtrend, even if the current bounce looks promising for the bulls.