USD/JPY - Daily Candlestick Chart 25th March 2009

USD/JPY - Daily Candlestick Chart 25th March 2009

Whilst yesterday’s wide spread up bar closed above all 3 moving averages it is interesting to note that once again the market has failed to clear the 98.75 region indicating that this is building into a very strong resistance area and therefore I would advocate extreme caution for two reasons.  Firstly, as I have mentioned before we are now approaching the Japanese year end and are likely to see unusual and contradictory price moves in the particular currency pair.  Secondly, a look at the monthly chart for the dollar yen suggests that March will close with a long legged doji which suggests that we are about to see a reversal from the rise in February and if this is the case then we could see the bearish tone reinstated during April.  Given the above 2 factors I would suggest waiting until month end for any longer term trading.  In the short term intra day trading is the order of the day using tight stop losses and short time scales.

As an example of a short term trading opportunity on the hourly chart last night in the evening session we had a strong bearish engulfing candle which would have yielded 50 pips in overnight trading.   As a further example on the 10 min chart the hammer formed at 11.40 this morning is currently yielding around 25 pips with the last 6 candles all sitting above the moving averages on this timescale.   It is these types of opportunities you will need to identify over the next few days in order to make some money from this pair.

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