Chart of the Week May 3rd – USDJPY
The USDJPY is poised to break the Kumo top for the first time since 2007. Could this be the beginning of a new uptrend for the pair? If it does break and have a weekly close above, a few hurdles remain before new skies are had.
Since the summer of 2007, this pair has been rejected by the weekly kumo after 4 previous attempts, all of which took 2-3mos to pan out before the kumo finally won. Since closing below it in Aug. 07’, the pair has lost 3500pips. However, from both a price action standpoint and an Ichimoku perspective, we could be witnessing the break either this week or in the upcoming ones.
The pair has never tested the other side of the kumo, yet it has done so now 4 weeks of the last 5. Its strongest closes in the last few weeks have been upcloses and the kumo seems like its about it give. It is also the smallest portion of the kumo, or what is called a ‘Kumo Window’ whereby the thinnest portion is being attacked. Kumo analysis like this suggests a break is highly likely.
What we have to be aware of is the upcoming 95 barrier which also houses the 61.8% fib. Of the 09’ high – low. The 50% fib. of this same move also sits perfectly at 93.15 or the upcoming flat top. With this in mind, we feel the most likely scenario is for the pair to break and close above, get rejected by the 95 barriers, then retreat to the flat kumo top whereby it will find support and start a climb higher.
If this plays out, it could mean a serious change and a challenge back of 100 and possibly more gains for the pair.
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