Forex Analysis: USD/JPY Spreads See Uptick Despite Long Term Bear Market
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For a longer-term overview it is always useful to study a weekly chart; the candlestick chart below is a good example of the USD/JPY forex market, showing price movements for the past four years.
Looking at this chart it becomes clear that from a long-term perspective, the US dollar has been in a bear market for virtually the entire period.
Even the massive spike we saw towards the end of October, when the price jumped from a low of ¥75.555 to ¥79.519 does not really look significant on such a long-term chart.
The price is positioned below the Ichimoku cloud at present and the green Chinkou Span line is far below the price of 26 periods ago, confirming that the dollar is still in the grips of a long-term bear market.
Moving to a shorter-term view, the four-hourly chart below shows price movements since the end of October 2011.
We can see that the forex spread betting pair has been moving mainly sideways during this period, reaching a low of ¥76.562 on 18th November and a high of ¥78.270 on 29th November.
Right now it is hovering slightly above the Ichimoku cloud. The green Chinkou Span line is also marginally above the price 26 periods ago.
Forex analysis of the chart would suggest that we are in a bull market, but we need more confirmation before a long trade can be advised.
If the price should move above the recent high of ¥78.270 we might see a short-term bull run, but given the fact that the longer-term bear market is still intact, this is unlikely to last long.
Any new low could mean the resumption of the underlying bear trend, providing a useful entry point for short traders.
Good luck and happy trading
Shai Heffetz, InterTrader
(Original article written 16 December 2011).
Spread betting carries a high level of risk and you can lose more than your initial deposit, so you should ensure spread betting meets your investment objectives.
The contents of this report are for information purposes only. It is not intended as a recommendation to trade. Neither InterTrader nor CleanFinancial.com accept any responsibility for any use that may be made of the above or for the correctness or accuracy of the information provided.
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'Forex Analysis: USD/JPY Spreads See Uptick Despite Long Term Bear Market' edited by DB, updated 16-Dec-11
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