USDJPY: Clear RSI Resistance at 67.31

USDJPY: Clear RSI Resistance at 67.31

The resistance on the Relative Strength Index here is interesting.  If you connect the price highs each time the Relative Strength Index hits the 67.31 area you get a perfect down trend line.  Connect that line to the first low and you have a perfect channel on a closing basis. 

On the Relative Strength Index lows there is no divergence at all here.  Each time price made a new low so did the RSI.  Divergence certainly is not required to make a bottom but it would be nice to see as it would give us more confidence that a bottom may be in at the 96.09 lows.   Now, there is divergence divergence between the 96.09 low and the previous days low but I am looking at the bigger picture.


Although I am looking at the move up from the 96.09 lows as a 5 Wave move up, I am not ready to jump on the long train yet.  I would like to see some kind of bullish signal out of the RSI to confirm the 5 Waves up from the 96.09 low.  This could happen in two ways: 1.  The RSI drops below the 23.415 low while price continues to close above the 96.06 low Creating a Positive Continuation Signal. 2. We get a close above 98.66 and the Relative Strength Index closes above 70.  These are the two things that would turn me bullish on this pair.

If the move up is NOT a 5 wave move up then I would like to see price test the bottom of the channel again while the RSI holds ABOVE the 22.413 low creating some divergence at the lows.

As always, if you like it, share it!!!

Thanks

Bob

USDJPY 4 HR Relative Strength Index Chart