FX.co ★ The USD/JPY technical analysis and trading recommendations for December 8, 2010

4-hour timeframe

Overview:
The sell signal with the target to 80.74 is still observed, as well as the correction against this signal. This signal is weak and confirmed, as the price is above the Ishimoku cloud and the Chinkou Span is below the price graph. The price has also strengthened above the Kijun-Sen, which weakened the signal even more. In this case the first support level of 81.87 is the current target for downside movement, but it is not recommended to trade until the price fixates below the Kijun-Sen. In case this level is passed the next target will be the second support level of 81.22. The Chinkou Span is below the price curve, which indicates the bearish sentiment and confirms the current sell signal. The Bollinger Bands show the downwards tendency, the lines are diverging and directed down. The MACD is ascending, thus indicating the current correction movement that will end after the MACD reverses down.

Trading recommendations:
Currently it is recommended to trade down with the first target to 81.87. Stop Loss is set above the Kijun-Sen (83.37). We enter the market only after the MACD reverses downside and the price fixates below the Kijun-Sen.

In addition to technical image, one should take into account the fundamental data and the time of their release.

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