06 January 2012 at 7:23 GMT
After 170 pip losses in 4 days , signs that selling interest was stalling were confirmed yesterday with USDJPY recording the strongest improvement in almost 1.5 months trading. The result was an improvement in Investor’s enthusiasm and recovery of more than half of the 170 pip loss ( 78.00 – 76.30). going into today positive intraday sentiment is overstretched but as yet there is no clear sign that investors willingness to buy is exhausted . Against this background the forecast is for sentiment to remain bullish above 77.07 targeting buying to 77.40 then to test the bear trend of lower highs since Decembers top at 77.62.
Exact risk to this forecast is not clear but most likely selling back through the late NY low yesterday at 77.07 should be a bearish signal that sentiment is correcting from overbought extremes and further losses are likely to yesterday afternoon’s low at 76.82 or 76.70.
