Forex Video Briefing (7/28) – USD/JPY, USD/CAD
USD/JPY is trading just under 102, and is testing a falling trendline that comes down from June’s high of 102.80, connected to July’s high of 102.26. We are seeing some bullish momentum as the 4H RSI tagged 70. Price has also crossed above the 200-, 100-, and 50-period SMAs. If USD/JPY can hold above 101.70, the bullish breakout is in play, and the 102.26 high would be the next resistance in the very short-term. Below 101.70 however, price will be focused on some support factors around 101.60, including a short-term rising trendline from the support pivot around 101.10.Only a break below 101.50 should revive the bearish outlook, which focuses on the 101.05-101.20 support area, then the 100.75 low on the year.
When you look at the 4H USD/CAD chart, you see a market that has put in a price bottom at the beginning of July, and has been bullish since. Price has broken above the 200-, 100-, 50-period SMAs as well as a falling trendline from June’s high of 1.0960. The RSI has tagged 70, held above 40, and the pushed above 70 again, showing development of bullish momentum. The current short-term bullish trend however is going to be challenged by the medium-term bearish trend as price approaches the 1.0835 pivot. You can see that this is also reinforced by a falling trendline in the daily chart, one that connects the April high of 1.1053 with June’s high of 1.0960. A break above 1.0850 should clear this last line of defense for the bearish mode. Until then, we should still look at USD/CAD as a bearish market. In fact as the RSI now stalls and turns from 60, we should anticipate a bearish continuation attempt. Also note that price is testing the 200-day SMA as resistance. Ability to hold USD/CAD below its 200-day SMA would be a very strong bearish signal, that has downside risk at least to 1.0588, 2014-low, down to the 1.0560 support pivot from Dec 2013.