24, September 2013

USD/JPY (a 4-hour chart)

USD/JPY (a 4-hour chart)

General Overview

There are more and more hints at further easing of monetary policy (weakening is bad for JPY) from officials of the Bank of Japan (BoJ). Earlier this month, the head of the BoJ Kuroda said that the regulator was willing to take additional steps if necessary.

The stated purpose of the aggressive policy of the Bank of Japan is to overcome deflation. However, in addition, the BoJ expects that the decline in the exchange rate of the national currency will spur exports and contribute to economic recovery.

However, Kiuchi and Ishida are worried that there won't be any growth of exporting Japanese products as long as the global economy recovers more slowly.

The current sell signal is strong and confirmed, as Chinkou span entrenched below the price and the price is below the Ichimoku cloud

The downward movement will be relevant as long as the price is below the critical Kijun-sen line if the price consolidates above the Kijun-sen, the "dead cross" will be weakened and may be canceled.

Tenkan-Sen and Kijun-Sen are crossed in a descending "dead cross". Kijun-sen is moving in a horizontal direction parallel to the cloud, and the Tenkan-Sen continues to grow. The price is below the cloud. The Cloud is growing.

Bollinger Bands follow the price up. The indicator shows a high volatility.
MACD is in a negative area.

Trading recommendations

The most likely scenario is the lateral movement in the range 99.75-98.50. We should open orders only if the price leaves the channel.

It is highly probable that the approach to 98.70 will be accompanied by the formation of price consolidation with a further bounce up to the resistance level 99.30.

As an alternative USDJPY may go to 98.30 - 98.40. But in order to come up to the trend, the price will have to break and consolidate below the support level of 98.70.