Technical Analysis – USDJPY bullish trend at risk of reversal
July 13, 2023 2:28 pm
USDJPY is seeking shelter within the 138.55-138.00 zone after a dramatic, almost vertical decline over the past week, which squeezed the price by 4.0% and put the 2023 uptrend at risk of a reversal.
An upside correction could be on the cards following the close below the lower Bollinger band. The RSI and the stochastic oscillator are warning of oversold conditions, suggesting that the latest bearish round might be overdone. Still, any recovery attempts could be short-lived as the MACD is currently far below its red signal line and is set to enter the negative region.
Should the sell-off expand below 138.00 and beneath the 38.2% Fibonacci retracement of the previous upleg, the next pivot point could take place between the 200-day exponential moving average (EMA) and the 2023 support trendline at 135.65. A decisive close lower could then prompt another decline towards the 61.8% Fibonacci mark of 134.00.
If the pair switches to recovery mode, the 50-day EMA, and the broken ascending trendline from March lows could still cap bullish actions around 140.30. The 23.6% Fibonacci level is marginally higher at 140.85 and the 20-day EMA is approaching that area too. Hence, a sustainable move higher, and perhaps an advance above 142.00, might be necessary to shift the attention back to the key 144.00-145.00 resistance area.
In brief, USDJPY remains negatively charged in the short-term picture, challenging its 2023 bullish outlook as well. If the 138.00 floor gives way, the bearish wave could worsen towards the 136.35-135.65 zone.
USDJPY is seeking shelter within the 138.55-138.00 zone after a dramatic, almost vertical decline over the past week, which squeezed the price by 4.0% and put the 2023 uptrend at risk of a reversal.
An upside correction could be on the cards following the close below the lower Bollinger band. The RSI and the stochastic oscillator are warning of oversold conditions, suggesting that the latest bearish round might be overdone. Still, any recovery attempts could be short-lived as the MACD is currently far below its red signal line and is set to enter the negative region.
Should the sell-off expand below 138.00 and beneath the 38.2% Fibonacci retracement of the previous upleg, the next pivot point could take place between the 200-day exponential moving average (EMA) and the 2023 support trendline at 135.65. A decisive close lower could then prompt another decline towards the 61.8% Fibonacci mark of 134.00.
If the pair switches to recovery mode, the 50-day EMA, and the broken ascending trendline from March lows could still cap bullish actions around 140.30. The 23.6% Fibonacci level is marginally higher at 140.85 and the 20-day EMA is approaching that area too. Hence, a sustainable move higher, and perhaps an advance above 142.00, might be necessary to shift the attention back to the key 144.00-145.00 resistance area.
In brief, USDJPY remains negatively charged in the short-term picture, challenging its 2023 bullish outlook as well. If the 138.00 floor gives way, the bearish wave could worsen towards the 136.35-135.65 zone.
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