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Yen hits strong resistance as US dollar rebounds

Jason Sen

USD/JPY formed a consolidation pattern through June then broke above trendline resistance at 111.50/60 last week. This made a short-term buy signal targeting strong resistance at 113.20/30.

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This resistance is where the longer-term 61.8% Fibonacci meets the 200-week moving average in severely overbought conditions, both on the daily and weekly charts.

EUR/JPY has already reversed from the 200-day moving average. However, I am going to show you the more important hourly chart.

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Note the small head-and-shoulders at the top of the chart, with the neckline broken yesterday. We are holding the 200-hour moving average perfectly but if this breaks we test the more important neckline of the bigger head-and-shoulders spanning the last week.

This just happens to be in line with the 23.6% Fibonacci support at 130.85/80. It held perfectly to allow a potential right shoulder to form. A break below here therefore acts as another sell signal to confirm a top at the 200-day moving average.

GBP/JPY is getting hit as the pound tumbles. You can see a significant reversal from very important one-year trendline and 500-week moving average and 38.2% Fibonacci resistance in the weekly chart below.

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However, more importantly, look at the three-year trendline in the weekly chart below! It’s no wonder the trend has changed and the outlook turned very negative.

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Jason Sen

Technical Analyst & Trader

For more information and trading education visit Intertrader

The content of this article is the personal opinion of the author and not Intertrader. You should under no circumstances consider the information and comments provided as an offer or solicitation to invest. This is not investment advice. The information provided is believed to be accurate at the date the information is produced.

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