Fundamental analysis

USDJPY volatility increase as up trend weakens.

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Red lines- medium-term bullish channel

green lines- short-term bullish channel

Black line- bearish RSI divergence

USDJPY remains in a strong up trend after breaking the inverted head and shoulders pattern a few months ago. Trend remains bullish as price continues making higher highs and higher lows. Both short- and medium-term channels remain intact. A strong pull back is long overdue. The RSI confirms a weakening up trend as it does not make higher highs. The bearish divergence in the RSI is an important warning that bulls should not ignore. Although our longer-term target according to the inverted head and shoulders pattern is much higher, shorter term Technical picture justifies a pull back. Last week price sharply lost more than 500pips only to find some balance afterwards. Despite the increase in volatility price remained inside the short-term channel. Support remains key at 146 and as long as we trade above this level, bulls have nothing to worry about.

The material has been provided by InstaForex Company – www.instaforex.com


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