TECHNICAL ANALYSIS USD/JPY
Dollar/yen has been moving in a major down-trend for several decades: at the beginning of the seventies it was trading at around 350, since the mid-eighties it went stably below 175. Aſter having collapsed to a historical low at 79.75 in April 1995, the dollar started a strong reversal, reaching a top at 147.65 in August 1998. From that level, the “secular” down-trend resumed, with a series of falling highs and “raids” below the key support at 115 (a level repeatedly supported by the Bank of Japan’s interventions). Te dollar reached a bottom at around 101.35/85 at the end of 1999, support tested again at the end of 2004. Te break of that support during 2008 caused a new sell-off, that led the dollar to a new bottom at 84.83 at the end of November 2009. Aſterwards the pair started moving sideways below the resistance at 95; since September 2010 the downtrend resumed to a bottom at 80.22 on November 1st, 2010. Since the beginning of November 2010 till mid-march 2011 the pair traded side-ways in the 80.22 - 84.51 trading-range. Te break through the mid-March’s bottoms – aſter the natural catastrophe that hit Japan – provoked a panic-
selling reaction that pushed the pair to a new historical low at 76.59, on March 17th (below the former bottom at 79.75 reached in April, 1995). Aſter a joint intervention of the leading Central Banks the pair recovered to a high at 85.53 on April 6th. Ten the selling pressure resumed again, and pushed the pair to a new historical low at 75.38 on October 31st , followed by a bounce towards 79.55 and a stabilization below that level and above 76.55. Te major trend for the US dollar against the yen remains bearish, but it’s loosing steam signaling a possible re-accumulation phase. A convincing recovery signal, though, would be triggered only above 79.55- 80.25, targeting the strong resistance area 81.50-82. In order to have a bullish signal for the months to come, it’s necessary a break above the key resistance at 85.50 (unlikely), targeting 88-90. Renewed weakness below 76.50, with a possible new fall towards the historical lows.
Maurizio Milano
FX
TREND
Trend 3-6 months Trend 6-12 months Trend 12-18 months
side/up side
down/side
S1 S2 S3
SUPPORTS 76.50+
75.35+++ 70
77.85
SPOT PRICE
R3 R2 R1
RESISTANCES 85.50++
81.50-82+ 79.55-80.25+ FX TRADER MAGAZINE January - March 2012 89
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