USD/JPY – Stalking Consolidation after a Sharp Rally

USD/JPY Daily Chart 11/26/2012 11:35AM EST


Bullish market: The USD/JPY has made some key bullish developments recently and has rallied in a very sharp manner since finding support above the 77.00 clip in September. The RSI in the daily chart shows persistent bullish momentum developing. As USD/JPY got to 82.80, the market stalled, and the pair has been consolidating the past 3 sessions (including today – 11/26) trading near the 82.00 handle during the 11/26 US session.

Consolidation length: Since the rally from the 77.12 low to the recent 82.83 high, there was 2 consolidation, or choppy periods, the first of which, was from 9/13 to 10/11 (4 weeks), and the second one from 10/22 to 11/14 (3 weeks). So, if 82.83 is going to hold for another consolidation period, be prepared if it does consolidate the rest of the year.

Retracement targets: The first key fibonacci retracement target at 38.2% is coincident with a previous resistance pivot.Therefore, the 80.60-80.70 area is the the first area to monitor/target, while stalking USD/JPY’s consolidation. 50% near 80.00 is also a valid retracement target. An aggressive target would be the 61.8% retracement at 79.30, but a push below that, and below 79.00 makes the bullish outlook in the longer-term unclear. Staying above 80.00 on the otherhand adds to the clues of a long-term bullish market in development, at least with the 2012 high at 84.19 in sight.

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these securities. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Forex involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility.