Technical Analysis – USDJPY bears could be preparing for a downleg
October 18, 2023 7:27 am
USDJPY edges lower as market focuses on geopolitical events
Quieter sessions lately but risk of intervention remains at large
Momentum indicators continue to send mixed signals
USDJPY is in the red today as market participants’ attention is monopolized by geopolitical developments and the increased risk of another oil price rally. The pair is experiencing a period of relative calm, but the intervention threat remains as USDJPY continues to trade a tad below the 150 assumed threshold.
With today’s candle nicknamed the hanging man and considered a strong bearish signal, the momentum indicators are still portraying a mixed picture. The Average Directional Movement Index (ADX) is stuck below its 25 threshold and thus pointing to a range-trading market. On the flip side, the RSI has completed 2.5 months above its 50-midpoint, confirming a strong bullish tendency in the market. More importantly, the stochastic oscillator has managed to climb again above its moving average, and it is tentatively edging towards its overbought territory. Should this move pick up pace, it would be seen as a bullish signal.
If the bears decide to take advantage of the bulls’ hesitation, they could try to push USDJPY below the 147.53-147.71 area, which is populated by the August 11, 1998 high and the 50-day simple moving average. The support set by the 78.6% Fibonacci retracement of the October 21, 2023 – January 16, 2023 downtrend at 146.65 is unlikely to trouble the bears much. The same though cannot be said for the busier 144.49-144.99 range that appears to be critical for short-term sentiment.
On the other hand, the bulls are trying to engineer a move higher without provoking the Japanese authorities. They could first have another go at the October 3, 2023 high at 150.15. If successful in overcoming this level, they could then have the chance to record a new 2023 high and potentially set a course for the October 21, 2022 high at 151.94.
To sum up, USDJPY bears are trying to take advantage of the recent calmer trading sessions and the open threat of Japanese government intervention.
USDJPY edges lower as market focuses on geopolitical events
Quieter sessions lately but risk of intervention remains at large
Momentum indicators continue to send mixed signals
USDJPY is in the red today as market participants’ attention is monopolized by geopolitical developments and the increased risk of another oil price rally. The pair is experiencing a period of relative calm, but the intervention threat remains as USDJPY continues to trade a tad below the 150 assumed threshold.
With today’s candle nicknamed the hanging man and considered a strong bearish signal, the momentum indicators are still portraying a mixed picture. The Average Directional Movement Index (ADX) is stuck below its 25 threshold and thus pointing to a range-trading market. On the flip side, the RSI has completed 2.5 months above its 50-midpoint, confirming a strong bullish tendency in the market. More importantly, the stochastic oscillator has managed to climb again above its moving average, and it is tentatively edging towards its overbought territory. Should this move pick up pace, it would be seen as a bullish signal.
If the bears decide to take advantage of the bulls’ hesitation, they could try to push USDJPY below the 147.53-147.71 area, which is populated by the August 11, 1998 high and the 50-day simple moving average. The support set by the 78.6% Fibonacci retracement of the October 21, 2023 – January 16, 2023 downtrend at 146.65 is unlikely to trouble the bears much. The same though cannot be said for the busier 144.49-144.99 range that appears to be critical for short-term sentiment.
On the other hand, the bulls are trying to engineer a move higher without provoking the Japanese authorities. They could first have another go at the October 3, 2023 high at 150.15. If successful in overcoming this level, they could then have the chance to record a new 2023 high and potentially set a course for the October 21, 2022 high at 151.94.
To sum up, USDJPY bears are trying to take advantage of the recent calmer trading sessions and the open threat of Japanese government intervention.
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