Japanese Yen Forms Bullish Consolidation Pattern

| June 18, 2011

The Japanese yen has been consolidating in a relatively narrow trading range near recent highs of the cyclical bull market for the past eight months. During the last month, this consolidation formation has developed a bullish character and it is now likely that the long-term uptrend is preparing to resume.

Notice how the index failed to meaningfully retrace after testing trading range resistance in early May before moving up to a marginal new high during the last two weeks. The yen is attempting to break out and a weekly close well above current levels would signal the highly likely resumption of the cyclical bull market. Additionally, given the duration of the consolidation pattern from October 2010, a confirmed breakout is likely to be followed by an advance of substantial magnitude and duration.

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Category: Commentary, Market Update

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