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