Weekly   

• Last Candlesticks pattern: Doji
• Time of formation: 02 Jan 2012
• Trend bias: Down

Daily    

• Last Candlesticks pattern: Doji
• Time of formation: 02 Feb 2012
• Trend bias: Sideway

USD/JPY – 76.68

Although the greenback broke below previous support at 76.55 and dropped to as low as 76.03 last week, Friday’s rebound on dollar’s broad-based strength after the release of better-than-expected U.S. job data suggests low is possibly formed and consolidation with upside bias is seen for a test of the Kijun-Sen (now at 77.15), however, a daily close above this line is needed to suggest the retreat from 78.29 has possibly ended and bring test of the Ichimoku cloud bottom (now at 77.55). Having said that, only a sustained breach of upper Kumo (now at 77.77) would confirm low is in place and bring test of 78.29 strong resistance, once this level is penetrated, this would signal the retreat from 79.55 has ended and bring further gain towards minor resistance at 79.10.

On the downside, a daily close below said support at 76.03 would shift risk to downside and extend the fall from 79.55 towards previous support at 75.31 (record low), however, it is necessary to see a breach of this level to signal major downtrend has resumed and extend weakness to psychological support at 75.00 and possibly 74.50/55 before another bounce later this quarter.

Recommendation: Hold long entered at 77.00 for 79.00 with stop below 76.00

On the weekly chart, despite last week’s brief fall to 76.03, the subsequent rebound on the release of stronger-than-expected U.S. job reports suggests consolidation with mild upside  bias would be seen for a test of the Tenkan-Sen (now at 77.15), then towards the Kijun-Sen (now at 77.55), however, only breach of strong resistance at 78.29 would revive bullishness and signal the retreat from 79.55 is over, then another leg of corrective rise to this level would follow. Looking ahead, a break of this resistance would bring a stronger retracement of recent decline to the Ichimoku cloud bottom (now at 79.90) but above resistance at 80.025 is needed to retain bullishness for correction towards the upper Kumo (now at 81.34) and possibly to 82.23 but reckon 82.83 (38.2% Fibonacci retracement of 94.99-75.31) would hold.

On the downside, in the event dollar closes below said support at 76.03 on a weekly basis, this would shift risk to downside for weakness towards said record low of 75.31 but still reckon downside would be limited to psychological support at 75.00 and price should stay well above 73.95 (61.8% projection of 94.99-76.25 measuring from 85.53), bring correction in Q2 2012.