FX.co ★ The USD/JPY technical analysis and trading recommendations for December 8, 2011

4-hour timeframe

Overview:
According to the analysis of the yen on Forex market, the new sell signal is quite weak, the Bollinger bands show sideways movement and the price is in the Ichimoku Cloud. The formed sell signal is weak and confirmed, since the Chinkou Span fixated below the price graph and the price is inside the Ichimoku cloud. At the moment the first target is 77.42 – the first support level, however it is uncertain if the price can exit the Ichimoku Cloud and continue with the sell signal. If this level is passed the second target will be the second support level at 76.87. Downside movement remains while the price is below the Kijun-sen (77.85). The Chinkou Span is below the price graph, which confirms the sell signal and indicates bullish sentiment. The Bollinger bands show sideways movement, the lines not diverging and directed sideways, therefore it is recommended to wai for the beginning of the trend movement. The MACD is descending, which indicates current downside movement, however it is not recommended to enter the market until the current sell signal strengthens.
Trading recommendations:
Currently it is recommended to wait until the price fixates below the Ichimoku Cloud and the Bollinger bands start diverging to the downside. In this case we can open sell positions with target at 77.. Stop Loss should be placed below 77.85. The MACD should signal downside movement.

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

Chart annotation:
Ichimoku 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 white bars in the indicators window.