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TECHNICAL ANALYSIS

Trading Long-Term Trends:
The USDJPY Continues To Gain Strength

TECHNICAL ANALYSIS Trading Long-Term Trend The USDJPY Continues To Gain Strength

The USDJPY continues to gain strength and create higher highs as the bulls keep a strong hold of the market. Using Technical Analysis and an understanding of the natural movement to price action, to what levels can we expect this trend to go to?

Below is the weekly time frame, which I use in conjunction with the monthly time frame to engage in past price action to establish areas of support and resistance. Determining levels of support and resistance that can have an impact on price action is usually an area that new traders find a challenge. As a long-term trend trader I look at the bigger picture. The pink lines on the chart represent the high and the low of the previous year, so in this case 2013. My software will automatically update these lines when the new year comes into effect. Once these resistance levels become support levels(in a bull trend and vice versa in a bear trend), I then target round numbers for areas of support and resistance.

 

TECHNICAL ANALYSIS Trading-Long-Term-Trend-The-USDJPY-Continues-To-Gain-Strength USDJPY weekly

 

The USDJPY is a good example of how price reacts to these pink line levels and round numbers. The trend from the figure 80 at the end of 2012 to the figure 100 in mid-2013 was a trend that gave out excellent profit before going into the expected area of consolidation. Once price broke through the resistance-turned-support high of 2013, price targeted the round number of 110. The bears temporarily took control of the market, pulling back to the pink line high which acted as support, and gave momentum back to the bulls. Price, this time, made light work of the figure 110 and we can now expect price to target the next round number of 120. If this is broken then 130, 140 and possibly the all-time high at just under 150. Of course, these levels are not guaranteed but they do give us target levels that price could possibly reach. Remember the trend is your friend and this is the direction you want to be going in.

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