This chart shows the evolution of the Yen/US dollar for the past five years. We can realize that there is two clear stages: The first one, which starts by the beginning of 2005, leads the prices to the level of 125 yens per $. In August 2007 the rising trend is broken down. This moment implied a cycle shift, as the vertical yellow line points out. This feeling change had significant consequences from a technical point of view, because there was not other choice apart from opening short positions.
From that moment onwards, US dollar has tried to consolidate a reliable support which allows a new upwards cycle. So far, the level of 85.00-87.00 has behaved as a prospective candidate, but it´s too early to consider if it eventually will play this supportive role for a bullish strategy. We consider that it´s much more relevant to watch over a possible resistance of 94.00 break-up, which definitely would imply the downtrend end.
Our Technical recommendation is to open a long strategy just if prices break out the level of 94.50. The next goal would be the area of 101.50. Be aware that you should set a stop loss in this case in 91.30. Meanwhile, it appears to be more coherent to maintain a short position.
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