Can the USD/JPY Break Below 93.55?

The 60 minute Reversal Channel Down pattern on the USD/JPY tells the story so far this week:  The yen is gaining on most currencies.  The yen is often a flight to safety buy when traders and investors are risk averse.  The risk aversion of the past month shows explains why the USD/JPY has gone from 99.00 to today’s levels just above 94.00.

The support above 94.00 is of particular interest as the channel down pattern’s Initial Trend is still high despite a bounce of the 94.06 level earlier this morning.  The breakout level on the pattern would be the resistance line (green) that is currently at 94.95.  There will likely be significant resistance in front of the 95.00 level.  The support and continuation plays could either be taken off the 94.90-94.95 area and is valid as long as prices stay below the downtrend line (green).  For a breakdown continuation play look to the downtrend line support level (blue) that is sitting just above 93.55 - but this would mean that prices have broken the 94.00 support and that price would break the March ‘09 low of 93.55.

The 15 minute chart shows the support well with the Forecast Region that is plotted from 94.04 to 93.65.  The Reversal Channel Down pattern on the 15 minute chart has thus far found support at this level and shows just how strong this area currently is.