FX.co ★ Technical analysis and trading recommendations for USD/JPY for 2010/07/13

4-hour timeframe

Overview:
The downward trend seems to be ended. At least, the ‘sell’ signal is canceled, but at the same time this movement can be a correction. The price left Ishimoku cloud, having reached the first resistance level of 89.09. However, the price did not manage to fixate above this level. The formed ‘buy’ signal is strong, as the price has already fixed inside Ishimoku and Chinkou Span – above the price curve. Therefore, it is better to bull. The current target is the second resistance level of 89.73, in case of the price fixing above this level the target will be at 90.77. If the price stays below Kijun-sen, it will indicate the ‘buy’ signal easing, purchase positions should be closed in this case. Chinkou Span is above the price, which testifies to a rising trend. Bollinger bands show either possible end of ascendant motion or a correction – the bands are converging and directed upwards. MACD is down-directed, which means a correction.
Trading recommendations:
In existing circumstances, it is advisable to bull with the target at 89.73. Enter the market only after MACD up-reversal. Set stop loss below 88.00.
Except the technical picture, the fundamental reports and time of their release should be considered also.
The chart annotation:
Ishimoku indicator:
Tenkan-sen — red line
Kijun-sen — blue line
Senkou Span A — light brown stipple line
Senkou Span B — light purple stipple line
Chinkou Span — green line
Bollinger Bands indicator:
3 yellow lines
MACD indicator:
The red line and the histogram with the white bars in the indicators window.