The Dark Knight Fx Series : Follow Up on USDJPY
Follow through with our 25th August analysis, USDJPY indeed consolidated in a choppy / volatile manner in which the envisaged Triangle pattern has developed. This is very typical for any currency that experiences a sharp sell-off.
Based on the daily technical studies, USDJPY looks set to revisit the topside scope (121.50-75) once again, as most of the negative technical signals are either bottoming out or trending upward. Take note that negative readings on these oscillators suggest that USDJPY is trading in a bearish market short-term. Our preferred 18-days & 50-days MA are located at 122.00/10 and 122.95/123.00 while Triangle support is estimated to be near 119.70/75 ahead of reaction low 119.00/05.
On a longer-term perspective, the weekly technical studies are still showing the long-term bullish trend remains intact and trend support unchanged at 115.80. The only major difference is that the weekly technical signals are either trending downward and Momentum has turned negative. This indicates that some form of bearish sentiment has set in.
Strategy: Current Spot: 120.55/60
Daily studies suggest sell-on-rally near 121.30/40 and depending on your risk appetite, stop could be placed above 122.35 (only 100 pips from entry), for resumption of a downward move to test 120.20 en route targeting 119.10-118.50 downside scope.
Intraday players might buy USDJPY now 120.60 (stop & reverse below 120.20) and reverse this trade near 121.30.