2013 begins with the USDJPY testing resistance from late 2008 / early 2009 lows (weekly chart) and sharp channel resistance (see daily chart). The rally since the beginning of December can be best described as parabolic, especially since 12/26. In Elliott parlance, a parabolic move is usually a 3rd or C wave. If the current rally composes a 3rd wave, then we’ve probably reached or are very close to reaching ‘fever pitch’ and giving way to a corrective decline. Weakness below 8650 would be the trigger for me to begin a short position towards at least 8565.
--- Written by Jamie Saettele, CMT, Senior Technical Strategist for DailyFX.com
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Jamie is the author of Sentiment in the Forex Market.