The USDJPY could be on the verge of a new bullish campaign

Let's revisit the main Carry-trade currency to see if our long term bearish view is on track. As you may remember, our long term analysis said that the USD JPY pair is on its way to visit 100 with a stop near 105.

Well, we are pleased to notice that the first target was achieved in the 21 of January. Although we still believe that the ultimate goal of the pair is down, but we know that like everything in the financial world, nothing goes in a straight line.

For some time, the pair is trying to recover from the last low and it is a good time to look at what are the signs for this temporary recovery and what are the possible targets for it.

To help us visualize the situation, we have a weekly chart of the USDJPY with a daily chart as an insert on the top left corner.

We believe in a nice recovery because:

1. (Weekly) Look how the price has left the lower boundary of the descending channel and is forming a very mild descending wedge. Such a pattern is bullish by definition because it shows that the buyers do not wait until the price reaches its normal limit on the downside.
   
   
2. (Weekly) We can see a divergence between the price and the MACD differential. This indicator shows the space between the signal line of the MACD and its Moving Average and such a bullish divergence (lower lows in prices but higher lows in the indicator) is very indicative.

It is a particularly good sign in medium-long term (like the weekly) charts.

1.  (Weekly) Look how the RSI is unwilling to stay under or near the 30 (oversold) level long. This resiliency is very bullish. Look at other currencies (USDCAD) for how much they pierce the oversold territory.
   
   
2. (Daily) We can count easily a 5 wave move in the last drop of the currency. This means that there should be a corrective move now.
   
   
3. (Daily) The price has moved successfully over the middle line of the Bollinger bands (20 Days Moving Average) and by doing so, has created a nice bullish shift in their movement.

Short term targets: The normal target for a corrective phase is the 50% area (near 110) where we can find the top of sub-wave 4.

Disclaimer

By no means do any part of this article recommends, advocates or urges the buying, selling or holding of any financial instrument whatsoever. Trading and Investing involves high levels of risk. The author and his company express personal opinions and will not assume any responsibility whatsoever for the actions of the reader. The author may or may not have positions in Financial Instruments discussed in this article. Future results can be dramatically different from the opinions expressed herein. Past performance does not guarantee future results. The content of this article was created with the best known data at the time. The writer and his company are not responsible for the accuracy or completeness of the mentioned data. The writer is not a registered consultant of any kind and so the reader should not see any single part or the whole analysis as an advice for any kind of action in the financial markets.
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About the Author

Moshe Shalom Head of Technical Analysis Department ForexManage Ltd Site: www.forexmanage.com Email: This email address is being protected from spam bots, you need Javascript enabled to view it