USDJPY Break & Retest?

Hello Traders!

Today’s article will be focused on the USDJPY. Needless to say, the Yen has been in a huge uptrend, so lets get this analysis starting to see if there is any power and momentum remaining. We will focus on the UJ, but the information will be also very useful for traders who trade in the EURJPY, GBPJPY, and any other cross on the JPY. So here is the free Forex advice and tips on the UJ.

USDJPY

The Yen has had rocket speed ever since October 2012. It first launched from 77 price level and in the meantime it was 30 pips shy of the 97 area. That in itself marks a 2,000 pip move. Not bad for the UJ, huh? 🙂

The entire month of February turned out to be sideways pause. But after weeks of congestion underneath the 94.50 area, the UJ’s bullishness again shows signs of revival.

Week chart

The week chart confirmed the continuation with a strong bullish close of the week candle above the 94.50 resistance zone. The close was very near the high indicating that there was no significant sell off or profit taking in that week.

The 20 ema is still showing us a good angle as well. The uptrend seems back in play.

MAR 13 2013 USDJPY 4 week

Questions

Is the break out real or false? Will we get a retest of the prior resistance zone top? Will we square up this candle and then go or will we reverse?

All very valid questions and that is why Winners Edge is here to offer valuable Forex trading advice and a way how to learn Forex trading.

In my opinion the break out looks sustainable. Not only does the week candle have a clear close above the resistance zone and near the high of last week, there are is also full day candle above that same resistance zone.

MAR 13 2013 USDJPY day

Trend channel

The well built trend channel on 4 hour chart is an excellent indication of a well built trend.

1)      The uptrend channel has a perfect angle of +/- 45 degrees. This angle translates into a perfect harmony between pip movement and time. The pace of this trend is very sustainable. Trend channels with a higher degree angle are too steep and not sustainable. Trend angles which are too shallow do not indicate sufficient strength.

2)      The uptrend channel has multiple hits on all internal trend lines, which confirms the validity of the trend channel. The lower, upper and middle trend line all have tons of hits and places where the currency respected those lines.

The currency just recently respected the upper trend line and now is correcting itself downwards. The middle line of the uptrend channel could be a support area. That level corresponds roughly speaking with a retest of the top of the previous resistance zone.

MAR 13 2013 USDJPY 4 hr2

Retest of resistance

The retest of the broken resistance area could definitely be retested at one point or another. There is a very decent statistical probability that this level will act as support. Why?

Many traders, big banks, and institutions are eyeing this key level and they could be looking for an entry at around that level.

Will that happen now? Maybe.

EW count

If we look at the 4 hour chart and apply a quick Elliott Wave analysis to it, then we can see that there should be still one more up move remaining to finish at least the wave 5 of wave 3.

The UJ seems to be in a wave 4 as we speak. And wave 4’s like to bounce at the 382 Fibonacci retrace level. Other bouncing areas are the 500 fib and of course the 618 fib.

The 618 Fib would be unusually deep for a wave 4 but the 618 would equal the same price level as a retest of the top of the resistance zone.

In any case the entire EW count is invalidated if the UJ would cross back into the price territory of wave 1, which is at 93.70.

After that we could still get a possible wave 4 and a wave 5.

MAR 13 2013 USDJPY 4 hr

1 hour

On the 1 hour chart we see that the -272 target of the 3 move correction could be another reason for a bounce. The lower single trend line in black could also act as support. The upper single trend line in black could act as resistance. If we do break one of these lines, especially the upper resistance line, then this could signal the continuation of the trend for one more push up.

MAR 13 2013 USDJPY 1 hr

We hope you enjoyed this Forex training and are able to use of these Forex tips of your Forex strategy trading.

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Thanks for sharing and good Trading!

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