USD/JPY (4-hour chart) as of Thursday (8/04/2011) jumped more than three big figures to poke above the key 80.00 psychological level on the heels of BOJ intervention, before pulling back and settling around the 79.00 price region. This rather swift spike brought price up to approach a key downtrend resistance line extending back to the late April high. Now sandwiched between resistance around 79.50 and support around 78.50, price is currently at a critical directional juncture. A break below 78.50, which would hint at a failed intervention, should target downside support around 76.50 once again. A re-breakout to the upside above 79.50 could potentially target the 81.50 resistance region.
(Click on chart to enlarge. Forex chart key: price on 1st pane, Stochastics 14,3,3 on 2nd pane; horizontal support/resistance levels in black; uptrend lines in green; downtrend lines in red; 50-period simple moving average (SMA) in orange; 100-period SMA in brown; 200-period SMA in dark blue; Fibonacci levels in magenta.)
James Chen, CTA, CMT
Director of Technical Research and Education