As shown on the accompanying daily chart, USD/JPY broke out dramatically above a key parallel downtrend channel on Friday (8/7/2009), and has settled down as of Monday (8/10/2009) morning just above the 97.00 support/resistance region. This parallel channel breakout is especially significant because it also represents a breakout above an important downtrend resistance line extending from the high in August 2008. Any substantial bullish continuation off this channel break (which would be confirmed on a breakout above 97.75) should target further upside resistance in the key 99.70 price region. In the event that the channel break ultimately loses its bullish momentum, near-term downside support resides around the top of the broken channel, as well as the 95.80 price region.
- James Chen, CTA, CMT
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