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8 Oct 2013
Flash: Heavy tone in USD/JPY may have MT bearish implications - JPMorgan
FXstreet.com (Barcelona) - According to Niall O'Connor, FX Analyst at JP Morgan, despite the broad consolidation phase for USD/JPY remains intact, the heavy tone on the pair, courtesy of the US shutdown, presents an important test which could have bearish medium term implications.
Key Quotes
"The broad consolidation is firmly intact and the triangle pattern below the May peak suggests an eventual upside breakout. However, the recent break of the key 97.75/55 support raises the risk of a deeper short term retracement. This area included the triangle trendline support from the August low and should have held if prices were to see a more immediate bullish shift."
"The short term backdrop has deteriorated with break while arguing for additional weakness. In turn, the focus has quickly turned to the next zone of important support levels in the 96.80/95.80 zone. This area represents the August lows, the 76.4% retracement from the critical 95.80 low, as well as the 200-day moving average."
"Note that USD/JPY has note violated the 200-day since November ’12. With the short term setup now oversold, we are carefully monitoring for signs of a reversal. Moreover, given the maturity of the consolidation/triangle pattern, USD/JPY should start tipping its bullish hand. Alternately, violations would imply an increased risk that a more complex corrective phase below the May peak is underway. This would suggest that prices are likely to put pressure on the important June low near 93.75."
Key Quotes
"The broad consolidation is firmly intact and the triangle pattern below the May peak suggests an eventual upside breakout. However, the recent break of the key 97.75/55 support raises the risk of a deeper short term retracement. This area included the triangle trendline support from the August low and should have held if prices were to see a more immediate bullish shift."
"The short term backdrop has deteriorated with break while arguing for additional weakness. In turn, the focus has quickly turned to the next zone of important support levels in the 96.80/95.80 zone. This area represents the August lows, the 76.4% retracement from the critical 95.80 low, as well as the 200-day moving average."
"Note that USD/JPY has note violated the 200-day since November ’12. With the short term setup now oversold, we are carefully monitoring for signs of a reversal. Moreover, given the maturity of the consolidation/triangle pattern, USD/JPY should start tipping its bullish hand. Alternately, violations would imply an increased risk that a more complex corrective phase below the May peak is underway. This would suggest that prices are likely to put pressure on the important June low near 93.75."