USD/JPY 4H Chart: Double Bottom

Source: Dukascopy Bank SA
© Dukascopy Bank SA
Judging by the situation in the daily chart, USD/JPY is currently in the middle of a new bearish wave within a descending channel. However, because of solid demand circa psychological 100 yen level, there is a good chance of a rally. This possibility is reinforced by the fact that the price is forming a double bottom, a pattern that implies a strong recovery once the neckline, in this case 102.50, is breached. If this is the case, the first target will be a cluster at 103.30/20, while the upside will likely be limited by the major downtrend line at 105 yen. Among the arguments against a more expensive Dollar are bearish technical indicators and the fact that the currency is overbought—62% of positions are long.
© Dukascopy Bank SA
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