By: Mike Kulej
After falling to 80.23, just shy of the all time low of 79.75, the USD-JPY rebounded to some degree. Turned out that another intervention by the Bank of Japan was not needed, market forces pushed this pair up the recent level of 83.77.
The daily chart of the Dollar-Yen shows a few bullish developments. First one was the direction of the move out of the 80-82 consolidation zone. No doubt, this action raised prospects for a change of trend here. That was followed by the price breaking the main trendline, which started at the 94.98 high back in May, a very positive sign and important step when talking about possible reversal. In addition, the ADX indicator started to turn up, signaling a trend under way, a bullish one in this case.
However, the USD-JPY is not out of the woods just yet. In order to confirm the long term reversal, this pair must move above the latest minor high, which is at the 86 level. Still some distance away, with another resistance at the 100 SMA just ahead. Also, the Friday candlestick is a doji, suggesting indecision about the most immediate direction. Combined with an overbought Stochastic indicator one could expect a pull back to perhaps 82. On balance, though, these first few bullish steps should be encouraging to those looking for the market reversal.
