September 3, 2013 – USD/JPY (daily chart) has broken out above both a descending parallel channel extending back to early July as well as the 50-day moving average. Prior to the breakout, the currency pair had been trading in a range within the descending channel and between two key moving averages – the 200-day to the downside and the 50-day to the upside. Since early August, the 200-day moving average has provided accurate price support within the context of the general bullish trend.
Despite the noted descending channel and the gradual correction to the downside that has taken place since the May multi-year high at 103.72, USD/JPY is still moving within the confines of a longer-term, overall uptrend as reinforced by the 200-day average. The current channel breakout has brought the pair up to approach the key 100.00 resistance level, a price that was last approached just a month ago. With continued upside momentum, a breakout above 100.00 could be the catalyst for a continued bullish trend with upside resistance objectives at 103.00, then a retest of the 103.72 high, and then further up towards the 105.00 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.Get the 5 most predictable currency pairs