Treasure Chest | Dec 06 2011
By Robert Clayton
What can be identified here?
Since the peak at 122.40 back in June 2007, USD/JPY has maintained in a four and half year downward pattern with the trend line now holding at 78.85-79.15. AliomFX expects the USD to strengthen and maintain to focus on the key downtrend. With the technical signals still very bullish, the risks of 78.85-79.15 breaking are highly probable. If successful, an upside objective of 94.00 will be confirmed.
From the break of the 79.15 the immediate target is 85.00. As such, it is recommended that additional holdings of the US dollar against the JPY be put in place from a break above 85.60.
Beyond 85.60, demand/strength is expected to increase which is likely to unfold towards the suggested measured swing of 94.00, before being seen as any sign of a likely reversal.
Like all breaks, AliomFX reports we may see a brief challenge of the break level likely to be around 78.85-79.15 before the initial rally.
What can heighten the chances of achieving the break?
As such, it should be noted if EUR/JPY breaks 105.25 (currently at 104.70) is a sign that JPY weakness will increase momentum and heighten the chances of the four and half year trend breaking. A move of this magnitude would suggest the following objectives over a 1 to 3 month time span.
Conclusion
EUR/JPY break of 105.25 would increase momentum adding further weakness for JPY and heighten the chances of the four and half year downtrend at 78.85-79.15 being cleared which would confirm the 94.00 measured target.
Robert C. Clayton, Technical Analyst • For further information please contact AliomFX 1300 885 686 or visit www.aliomfx.com.au • Chart source Meta Trader. Content included in this article is not by association necessarily the view of FNArena (see our disclaimer).
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