TECHNICAL ANALYSIS USD/JPY
The pair 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, reaching a historical low at 79.75 in April 1995. After a strong bounce reaching a top at 147.65 in August 1998, the “secular” down trend resumed, with a series of falling highs and bottoms, culminated in a new historical low at 75.38 on October 31st 2011. After an accumulation phase, since the end of 2012 a strong rally brought the pair in the 103- 104 resistance area (max 103.74 on May 22nd), followed by a correction towards 93.65 on June 17th. The following bounce has brought the pair around the peaks touched at the end of May. The ultra-expansionary monetary policy adopted by the new Abe administration has produced a strong and generalized depreciation of the yen
(-25% vs Usd since October 2012 to May 2013), of such a magnitude never seen in the previous 15 years. The strong up-trend – started in October- November 2012 – entered a consolidation phase in the June-October period. The recent overcome of 101.55 has brought the pair back to the tops around 103.75 (max 103.39 on December 10th), previously reached at the end of May. The up- trend would lose momentum in case of a fall below 99-100, but the technical outlook would turn bearish only below 95.80-96.50 (premature), with a confirmation at the break of the key-support at 93.65 (unlikely). A break above the tops would target, in the coming months, the strong resistance at 110.
Maurizio Milano
FX
TREND
Trend 3-6 months Trend 6-12 months Trend 12-18 months
up up up
S1 S2 S3
SUPPORTS 99-100+
95.80-96.50 93.65++
102.64
SPOT PRICE
R3 R2 R1
RESISTANCES
108-109+ 105
103.75-104.00++ FX TRADER MAGAZINE January - March 2014 81
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