Yen Pairs Weekly Update - Feb. 11/16 close

USDJPY

Last week this pair broke above the upper trend line of the weekly descending channel inscribed in a falling wedge, nearly reaching the SMA34 at the end of the week. Daily charts formed an apparent double top yet to be confirmed at that point. On the last two days, the Dollar-Yen broke over Friday highs at 83.68 coming near psychological level 84.00 but is now back below that resistance, having closed and opened below 83.60. I still think there will be an attempt to reach around 84.50 (between the 127% and 138.2% Fibonacci extensions on previous daily swing high) which is a stronger resistance level and probably push further towards the daily SMA200 at psychological level 85.00.

EURJPY

The weekly charts show a symmetrical triangle formation and a bullish week confirming the previous pin bar. Last Thursday and Friday ended both on a doji, showing some indecision of the market sentiment at the moment of approaching the upper line of the triangle. On Monday, EURJPY continued the small correction to the downside (better seen on 4-hour charts) that it had initiated last week, reaching near 112.00 at the 61.8% Fibonacci retracement, and recovering over the last two days to end up a little above Friday close price, at 113.45. The outlook for this pair in my opinion is bullish and aiming to an extension towards psychological level 116.00 (127% Fibonacci) or at least to a retest of the weekly highs at around 115.70.

Daily moving averages are all turning to the upside, and the charts are showing the possible formation of a slanted inverted head and shoulders, which would lead us to much further gains on the bullish side (probably around psychological level 120.00) on a medium/longer term.

(click to enlarge)

The neckline of a daily head and shoulders formation, at around level 132.50, was already broken last week, undoubtedly leading to its projection towards 139.00/50, or at least a re-visitation of August 2010 highs at around 137.50/60 and 138.2 weekly Fibonacci extension. This week the bullish run has continued, breaking another resistance level at 134.20 (November 2010 highs) on Tuesday which was retested yesterday. I would vouch for a follow up of this bullish run with the above-mentioned possible targets. The pair broke the weekly descending channel and is now trading about 100 pips above its upper trend line, at 134.60.