FX TECHNICAL ANALYSIS


Chart 6: USD/JPY daily


Chart 7: USD/JPY weekly USD/JPY


Another currency that makes up part of the US Dollar Index is the Japanese Yen. The USDJPY pair spent the whole of 2017 trending in a sideways direction as you can see in the daily chart (Chart 6). In fact, the moving averages started converging in the second quarter and travelled sideways until the end of 2017 to confirm the sideways trend. We broke out of the


20 FX TRADER MAGAZINE April - June 2018


sideways channel to the downside in February of this year, reaching 105.52 before a bounce in the third week of February fell short of a retest of the lower trend line of the channel. Since then, the pair has been trending steadily lower.


The weekly chart (see Chart 7) shows a more significant break to the downside. Note the upward sloping trend line from the third quarter in 2012, which joins the low


in 2016. This five year trend line was also broken in February, and acts as a more important negative signal. The break of this triangle is likely to take the pair back down towards the 2016 lows of 100.07/99.08.


We are trading below the 38.2% Fibonacci level of 106.64 which keeps


the outlook negative, but


we must check the monthly chart to ensure we are not missing any important longer term support.


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