TECHNICAL ANALYSIS CURRENCY OUTLOOK MAJOR US DOLLAR RATES - FEATURED MARKET – USD / JPY.
USD/JPY peaked at 124.14 in June 2007, a 4-5 year high, before breaking down from a year-long (orange) bull channel connecting 109.03 & 115.17 lows to signal a downtrend. A succession of significant declines followed by corrective recoveries has occurred since then and as yet there are still no clear-cut signs of a base. There are two long-term bear channels in force, a (purple) 13 year channel connecting the 147.61 (1998) & 124.14 (2007) peaks with the 1999 low at 101.28 and a steeper narrower (brown) four year channel connecting 124.14 (2007), 94.97 (2010) & 85.53 (2011) tops with the 2008 low at 87.13. Also, within the 4 year bear channel there is a narrower (red) sub- channel connecting 94.97 & 85.53 highs with 80.25 & 76.53
lows. The bases of the two long-term channels currently intersect around 69.77 & 59.30, falling by around .05 & .20 per week, while the sub-channel is around 71.39, also falling by around .20 per week. A breakdown through the April 1995 all-time low at 79.91 occurred in March 2011, with an initial spike lower to 76.53 being followed by an recovery to 85.53 three weeks later. A return to / slight overshoot of 76.53 has followed, we see the risk of a continued decline over coming weeks and months towards the base of the sub-channel and the 13 year channel. To improve matters, we would need to see the top of the red & brown channels (currently around 81.00 & 81.15) and then key former support-turned-resistance at 84.83-85.53 cleared.
FX
MAJOR TRENDS AND TARGETS FOR SELECTED ASIAN FX RATES As at 08 September
EUR/USD GBP/USD USD/JPY USD/CHF USD/CAD AUD/USD
Current level 1.3990 1.6035 77.30 .8670 .9850
1.0630
Major trend Up
Sideways Down Down Down Up
Major target 1.5144 & 1.6039
67.42 & 62.07 .7005 & .5864 .9061 & .8073
1.1460 & 1.1890
Trend change level 1.3428
1.4783 / 1.7041 85.53 .9783
1.0854 .9538
FX TRADER MAGAZINE October - December 2011 73
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