Technical Analysis – Are we close to a meaningful correction in CHFJPY?
October 26, 2023 9:27 am
CHFJPY trades sideways today, a tad below the all-time high
Intervention threat increases as JPY crosses reach new highs
Momentum indicators show increasing signs of rally exhaustion
CHFJPY is trying to record a green candle today as it remains very close to its all-time high of 168.40. The latest upleg from the October 3 low of 159.99 has been aggressive, increasing the possibility of intervention from the Japanese authorities and thus forcing some profit taking from the bulls.
In the meantime, the momentum indicators are gradually opening the door to a pullback. The stochastic oscillator is trading sideways and potentially preparing for a move below its overbought (OB) territory. Should this take place, it would be perceived as a bearish sign. Similarly, the RSI appears to have topped and it is now heading towards its 50-midpoint. More interestingly, the Average Directional Movement Index (ADX) seems to give the strongest rally-exhaustion signal. It is moving aggressively lower, supporting the argument that the recent bullish trend has potentially run its course for now.
Should the bearish signals multiply, CHFJPY bulls could stage for a move towards the 50- and 100-day simple average (SMA) at the 163.10-165.01 region. If successful, the next support area appears to be the June 30, 2023 high at 161.64, just above the much busier 158.46-158.74 area, which is populated by the July 23, 2023 low and the 23.6% Fibonacci retracement of the May 15, 2022 – October 20, 2023 uptrend.
On the other hand, the bulls’ aim remains to record higher highs without provoking the Japanese authorities. They could try to reclaim the 168.40 level, giving them the chance to record a new all-time high, and then set their course for the 170 level.
To sum up, CHFJPY bulls are protecting their hard-earned profits, but they might soon be under pressure if the momentum indicators send a plethora of bearish signals.
CHFJPY trades sideways today, a tad below the all-time high
Intervention threat increases as JPY crosses reach new highs
Momentum indicators show increasing signs of rally exhaustion
CHFJPY is trying to record a green candle today as it remains very close to its all-time high of 168.40. The latest upleg from the October 3 low of 159.99 has been aggressive, increasing the possibility of intervention from the Japanese authorities and thus forcing some profit taking from the bulls.
In the meantime, the momentum indicators are gradually opening the door to a pullback. The stochastic oscillator is trading sideways and potentially preparing for a move below its overbought (OB) territory. Should this take place, it would be perceived as a bearish sign. Similarly, the RSI appears to have topped and it is now heading towards its 50-midpoint. More interestingly, the Average Directional Movement Index (ADX) seems to give the strongest rally-exhaustion signal. It is moving aggressively lower, supporting the argument that the recent bullish trend has potentially run its course for now.
Should the bearish signals multiply, CHFJPY bulls could stage for a move towards the 50- and 100-day simple average (SMA) at the 163.10-165.01 region. If successful, the next support area appears to be the June 30, 2023 high at 161.64, just above the much busier 158.46-158.74 area, which is populated by the July 23, 2023 low and the 23.6% Fibonacci retracement of the May 15, 2022 – October 20, 2023 uptrend.
On the other hand, the bulls’ aim remains to record higher highs without provoking the Japanese authorities. They could try to reclaim the 168.40 level, giving them the chance to record a new all-time high, and then set their course for the 170 level.
To sum up, CHFJPY bulls are protecting their hard-earned profits, but they might soon be under pressure if the momentum indicators send a plethora of bearish signals.
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