Richard Perry
Independent Analyst
The prospects of a dollar correction are growing, but until a breach of a key reaction low is seen we must be mindful that this may just be a consolidation within the uptrend. Since hitting the high at 118.96 last week, Dollar/Yen has developed a sideways trading band. The support at 117.33 has held for a few days but the pressure is growing. The daily momentum indicators suggest that upside momentum is waning, with the RSI turning lower (although still above 70) and MACD lines now threatening a crossover. The intraday hourly chart shows a lower peak yesterday at 118.57 with flattening hourly moving averages. Technically, the loss of support at 117.33 would not signal the end of the uptrend, which would theoretically remain intact until the reaction low at 115.44 has been breached. If it got to that stage the momentum indicators would certainly already have been calling for a correction, so watch then closely. For now this remains a consolidation but the bulls will need to return quickly to prevent this turning into a correction which then will need to begin talk of retracements.
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