Intersection of 4-year Bear Trendline Slows USDJPY

 While the week is not over yet, resistance at the intersection of the 4-year bear trendline for USDJPY at approximately 85.50 – 86.00 has finally slowed the pair, leaving it 50 pips from yesterday’s high at 85.50. USDJPY has vaulted nearly 900 pips the previous 3-weeks in what will likely be seen as one of the more memorable price moves of 2011.

The powerful rally in USDJPY was even able to steal the spotlight from the AUDUSD, which displayed its own considerable strength in jumping nearly 800 pips over the same period. This example of price action in the dollar being extremely strong against the yen, yet weak against the Aussie reminds us all that it is a market of currencies and not a currency market. This apparent disparity of the dollar moving in opposite directions against two major currencies also validates the approach of analyzing individual currencies, as opposed to analyzing the relationship between currencies, also known as parallel analysis.

Jay Norris is host of The Daily Forex Report and the author of  the soon to be released Mastering Trade Selection & Management, McGraw-Hill, 2011.

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