USD/JPY – Bearish Break Maintains Pressure on the 2014-Lows

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USD/JPY - Bearish Break Maintains Pressure on the 2014-Lows

This week USD/JPY extended a rally from last week’s low around 101.10. The 4H chart shows that this rally was going against the prevailing bearish trend since June. If it pushed above 102 and clear about the falling channel resistance, the bearish outlook would be shelved. Instead, the market failed to push above 101.80 and is giving us a bearish continuation signal today.

USDJPY 4H Chart 7/17
usdjpy 4h chart 7/17
(click to enlarge)

– Looking at the 4H chart, we see that price fell below the 200-, 100-, and 50-period simple moving averages.
– The moving averages are also sloping down, and getting into bearish alignment.
– The RSI did push above 60, but failed to push to 70. This shows lack of bullish momentum. IF the RSI reading falls back below 40, we are likely in a bearish continuation.

With the prevailing trend since June bearish, and today’s price action signaling bearish continuation, the pressure is on the 2014-lows around 100.75 as you can see on the daily chart.

USD/JPY 7/17 Daily Chart
usdjpy daily chart 7/17
(click to enlarge)

– The daily chart also shows a shift toward the bearish outlook as price is now trading below the moving averages. Price has not been trading below the 200-day SMA since 2012.
– You can see that the 2014 price action has been in a descending triangle, which has a slight bearish bias. You also saw some bullish “clear-out” spikes that reflect the control of the bears in this market in 2014.
– The pressure is going to be heavy on 100.75. A bounce off this area, and a break above 102 will be needed to shift from the neutrla-bearish outlook to a neutral-bullish outlook in the daily chart.

To contact the reporter of this story, email Fan Yang at fan@forexminute.com
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Fan Yang has been a professional forex trader and analyst since 2007. He specializes in technical analysis and has a Chartered Market Technician designation since 2011. He was the chief technical strategist at CMSFX He was also the founder and chief currency strategist at FXTimes Over the years, Fan has not only been a trader and analyst but also an educator. As a proponent of both technical and fundamental analysis in trading, Fan advocates simplicity and discipline as key factors in making trading decisions when faced with so many "clues" and "signals". Currently Fan Yang is the chief currency analyst and webinar instructor at forexminute.com.