| The Japanese yen has been in a long term down | | | | |
| trend against the dollar since 2005 and after | | | | The RSI is losing strength and so to is the |
| its recent rally the bears should take | | | | stochastic. |
| control again. This scenario will present a | | | | |
| good risk reward trading opportunity as the | | | | Stochastic momentum is waning. |
| currency starts to fall again. | | | | |
| | | | We don't yet have a signal of weakness ( |
| The Japanese yen is a currency that simply | | | | watch for both lines to cross the downside |
| does not look near a trend change and | | | | with bearish divergence) but when this |
| sticking with the major down trend is the way | | | | occurs and RSI falls to, the bears will get |
| to go - let's take a look at it. | | | | the nod. |
| | | | |
| If we look at the daily chart, the resistance | | | | Use the Bollinger band to indicate targets. |
| is clear - at last weeks spike to the upside | | | | |
| at the 8300 level. | | | | The first port of call will be the mid line |
| | | | and if momentum is weak when it approaches |
| Prices have seen reduced volatility over the | | | | this level, look for a pop to the downside to |
| last couple of days and price momentum looks | | | | test the bottom band. |
| to have peaked. | | | | |
| | | | If you are trading currencies, you can make |
| So when will the bears take control? | | | | big long term gains trading with the major |
| | | | trends and the yen is definetly one of those! |
| The key is to watch short term price | | | | There is no indication of a trend change just |
| momentum. | | | | yet, so a good strategy is selling rallies. |
| | | | |
| Pull up the daily chart of the yen (a good | | | | Be cautious! |
| free service is futuresource.com) and add the | | | | |
| studies: | | | | The yen is one of those currencies that can |
| | | | always make you look stupid and is very |
| Relative Strength Index ( RSI), Stochastic | | | | volatile, so don't just enter and hope |
| and Bollinger Bands. | | | | momentum wanes - WAIT FOR CONFIRMATION. |
| | | | |
| The former two studies indicate short term | | | | The stochastic and RSI are a great combo for |
| price momentum - we don't have enough space | | | | doing this. |
| here to go into detail about how they work | | | | |
| (simply check our other articles) but if you | | | | They will help put the odds in your favour |
| are not familiar with them you should be - | | | | and help you in terms of long term |
| there great timing indicators. | | | | profitability. |
| | | | |
| The RSI Has been rising and momentum is now | | | | Over the next few days watch for the bears to |
| waning it is presently just touching the 56 | | | | take control again and the down trend to |
| level (RSI on the yen has not been higher | | | | resume, but don't jump in wait for momentum |
| than 70 on the chart) and we don't see it | | | | to weaken. |
| getting there this time and it seems to be | | | | |
| trying to double top. | | | | Good luck and good trading! |