Forex Video Briefing (10/10) – Monitoring USD/JPY’s Bearish Correction

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[videojs mp4=”http://s3.amazonaws.com/fxcom-amazon-s3/2014/10/BearishCorrection1.mp4″]
Forex Video Briefing (10/10) – Monitoring USD/JPY’s Bearish Correction

In the 1H chart, the market looks bearish. The 200-, 100-, and 50-hour simple moving averages (SMAs) are sloping down in bearish alignment. The RSI has tagged 30, and for the most part held below 60, except for a brief breach. This shows maintenance of the bearish momentum. Lastly, price is still holding below a falling trendline formed this week. So, within the current consolidation roughly between 107.50 and 108.20, there is a bearish bias.

Now, the US session has so far been bullish on USD/JPY, and if price does breaks above 108.20, it will break above this week’s falling line, and we can see a shift from the bearish market this week to a neutral one especially if the 1H RSI does clear above 60.

When we look at the 4H chart, we can see that a break above 108.20 does break above a falling wedge consolidation pattern, suggesting a bullish continuation. In the bullish continuation scenario, we should first monitor the 108.80-109 area as a key challenge, if price can start staying above 108.00 on dips, and then break above 109, the bullish continuation scenario is even more likely.

On the other hand, a break below 107.50 opens up the 107.00 psychological level and common price during a tight consolidation in mid-September. A break below 107.00 exposes the 105.44 level, which was the previous 2014-high before it was broken in September.