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Technical Analysis – USDJPY at a key resistance area as overall technical picture turns bullish
July 20, 2023 1:27 pmVideo
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USDJPY is hovering inside a very busy area as the bulls are trying to overcome the resistance set by the lower boundary of the recent upward trend channel. They want to regain market control, after a brutal correction, and take advantage of the continued convergence of the 100- and 200-day simple moving averages (SMAs) for their own benefit.
In the meantime, the momentum indicators are supportive of the bulls’ intentions. The stochastic oscillator has broken its moving average and has moved above its oversold territory. This is a bullish signal. Similarly, the Average Directional Movement Index (ADX) is edging lower again today, confirming the presence of a weakening bearish trend in the market.
Should the bulls manage to clear the lower boundary of the recent upward trend channel, they could have a go at breaking the busy 139.38-140.47 area. This is populated by the July 14, 2022 high, the 23.6% Fibonacci retracement level of the March 9, 2022 – October 21, 2022 uptrend and the 50-day SMA. The path then looks clear until the September 7, 2022 high at 144.99, which would provide the chance for a new 2023 high if overcome.
On the flip side, the bears are trying to avoid a return to the recent USDJPY highs. They appear willing to defend the 139.38-140.47 range and, if successful, push USDJPY towards the key 136.83-137.04 area that is defined by the 100- and 200-day SMAs. Even lower, the January 31, 2002 high at 135.19 is unlikely to trouble the bears much.
To sum up, after a sizeable correction the bulls are trying to regain market control, drawing support from the momentum indicators.
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