USD/JPY Forex Trend Forecast
Currencies / Japanese Yen Aug 26, 2018 - 03:44 PM GMTPattern – I believe a top is in place at 113.21 and a new downtrend has begun with price in the process of putting in a lower high. While it is possible that the first lower high is already in place, it is my belief that is not the case and a 5 point broadening low formation is in play with price currently on its way up to a point 4 high which will be the lower high. Considering the likely point 5 low is much lower, I am essentially viewing this formation as just a continuation pattern. The point 2 highs is at 112.50 and price turning back down at that lower would set up a bearish lower double top and that is certainly a very valid possibility.
Daily Chart
Bollinger Bands – price looks headed for the upper band and I expect price to push up into this band.
Fibonacci – the recent low was at support from the 76.4% angle and is not back at the 61.8% angle which has provided some resistance. I favour price to overcome this resistance and eventually top out around resistance from the 50% angle. The 76.4% retracement level of 112.39 looks achievable while the 88.6% retracement level at 112.81 looks a touch too far. Perhaps around the 112.60 mark??
RSI – price is nearing overbought territory and I favour this indicator to get up and into that territory before price turns down.
Monthly Chart
Pattern – we can see a double top, denoted by the horizontal line, is in place and given that I expect a big reaction down. I believe and ABC correction is playing out with price currently tracing out its way to a wave C low.
Bollinger Bands – price is currently around the middle band and I doubt it will be able to overcome resistance from this band and make its way up to the upper band. Instead, I expect price to trade down from here and hug the lower band.
Fibonacci – price looks to be encountering resistance from the 61.8% angle while I am targeting the 88.6% angle to bring in the wave C low. The 76.4% retracement level at 87.50 is my minimum target and it would not surprise to see price give this level a good test.
Moving averages – in a bearish position.
RSI – in strong territory but it looks bearish overall as moves down are now getting into oversold territory while moves up seem unable to get into overbought territory.
Summing up – after one last little rally in the coming days, I expect a large move to the downside.
By Austin Galt
Austin Galt has previously worked as a stockbroker and investment banker while studying technical analysis for over two decades. He is also the author of the book White Night: A Colombian Odyssey
Email - info@thevoodooanalyst.com
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