Chart of the Day - 1/19/2010 – USD/JPY

[James Chen]

1/19/2010 – USD/JPY – Price action on USD/JPY, a daily chart of which is shown, has displayed marked bearishness for more than a week, since the top of a parallel downtrend channel was reached and respected in early January. In the course of this bearishness, price broke down below a key intra-channel uptrend support line extending from the late November lows. After that breakdown, price has continued to descend down to a key support region around the 90.50 area. Currently, the pair has made a tentative bounce up off this support region. Any subsequent breakdown below this support area could lead to further bearishness targeting support in the 88.00 price region. To the upside, the top border of the noted parallel downtrend channel should continue to serve as dynamic resistance in the event that price extends its current support bounce.

James Chen, CMT
Chief Technical Strategist
FX Solutions

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(Chart courtesy of FX Solutions' FX AccuCharts. Price on 1st pane, Slow Stochastics on 2nd pane; horizontal support/resistance levels in yellow; uptrend lines in green; downtrend lines in red; chart patterns in white; 50-period simple moving average in light blue.)