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Forex Analysis: USD/JPY Hits Five-Year High before Pullback

2013-12-13-USDJPY

December 13, 2013 – USD/JPY (daily chart) hit a five-year high at 103.91 in early trading on Friday before pulling back down near the key 103.00 level. This new high slightly surpasses the 103.72 high that was established in May, a price level not previously seen since October 2008.

Having reached this new height, if only briefly, the pair has tentatively confirmed a continuation of the strong bullish trend that has been in place since the September 2012 low near 77.00. This strong uptrend was interrupted by a plunging correction after the noted May 103.72 high, and spent the next five months consolidating within a large triangle pattern formation that was finally broken to the upside in early November. That breakout resulted in a sharp climb that quickly reached and surpassed the key 100.00 psychological level and then went on to reach its 103.00 target in early December.

Having just established a new long-term high, the pair continues to exhibit a general bullish bias into the end of the year. If price is able to maintain above 103.00, the next major resistance objectives to the upside reside around 105.00 and then 108.50. If instead the current highs are respected as a strong double-top resistance level, key downside support on a potential trend failure continues to reside around the major 100.00 level.

James Chen, CMT
Chief Technical Strategist
City Index Group

 

Forex trading involves a substantial risk of loss and is not suitable for all investors. This information is being provided only for general market commentary and does not constitute investment trading advice. These materials are not intended as an offer or solicitation with respect to the purchase or sale of any financial instrument and should not be used as the basis for any investment decision.

James Chen

James Chen

James Chen is Chief Technical Strategist for City Index Group. He is also a Chartered Market Technician. He is the author of the books: "Essentials of Foreign Exchange Trading" (John Wiley & Sons, 2009) and "Essentials of Technical Analysis for Financial Markets" (John Wiley & Sons, 2010). Mr. Chen writes currency analysis, leads forex trading seminars and has appeared in numerous major financial media outlets, including CNBC, Bloomberg TV, Forbes, Reuters, Dow Jones, and the Associated Press.