usd-jpy

Despite the latest bounce, the pair still remains confined to a very strong downtrend off the April 2009 highs and any rallies should be limited.

USD/JPY: Despite the latest bounce, the pair still remains confined to a very strong downtrend off the April 2009 highs and any rallies should be limited. However, while a medium-term lower top is now being sought out below 97.80, the latest break above 93.20 warns that the market could still see additional upside before attempting to roll back over. Falling trend-line resistance off of the April 2009 highs comes in at current levels and as such it will be interesting to see if the pair can manage a close above this line. A close above 93.50 could open a direct retest of psychological barriers at 95.00, while failure to do so may suggest that the medium-term lower top is ready to start to form.

Written by Joel Kruger, Technical Currency Strategist for DailyFX.com
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