Technical Analysis – USDJPY eases from 7-month high as upside momentum wanes
June 26, 2023 2:27 pm
USDJPY has started the week on the backfoot after hitting a fresh seven-month peak of 143.86 on Friday. Early warnings of a looming negative correction were provided from the upper Bollinger band when the price kept popping above it, as well as the stochastic oscillator, as the higher high in the price action corresponded with a lower high by the %K and %D lines.
The stochastics continue to point lower in the four-hour chart, although they are some distance from the 20 oversold mark, while the MACD, which remains well above zero, has slipped slightly beneath its red signal line. This suggests a mild bearish bias that could potentially be overturned should the price find support in the 20-period simple moving average (SMA), also the mid-Bollinger band.
A bounce off the 20-period SMA at 142.79 would likely be quickly met with stiff resistance at the 144.00 region, which encapsulates Friday’s peak and the upper Bollinger Band. However, a successful break higher would clear the way for the 145.00 handle as well as the 78.6% Fibonacci retracement level of the October 2022-January 2023 downtrend at 146.65.
If though, the negative bias strengthens over the next few sessions and the 20-period SMA is breached, the pullback could extend towards the 50-period SMA at 141.84. Steeper losses would see the 141.00 and 140.00 levels being tested before the bears tackle the 50% Fibonacci of 139.58.
Summing up, the current weakness in USDJPY seems temporary and the longer-term uptrend that’s been developing during 2023 remains firmly intact. However, a drop below the 20-period SMA would attract more sellers and should the decline reach the 50-period SMA, the outlook would begin to change to a more neutral one in the short-to-medium term.
USDJPY has started the week on the backfoot after hitting a fresh seven-month peak of 143.86 on Friday. Early warnings of a looming negative correction were provided from the upper Bollinger band when the price kept popping above it, as well as the stochastic oscillator, as the higher high in the price action corresponded with a lower high by the %K and %D lines.
The stochastics continue to point lower in the four-hour chart, although they are some distance from the 20 oversold mark, while the MACD, which remains well above zero, has slipped slightly beneath its red signal line. This suggests a mild bearish bias that could potentially be overturned should the price find support in the 20-period simple moving average (SMA), also the mid-Bollinger band.
A bounce off the 20-period SMA at 142.79 would likely be quickly met with stiff resistance at the 144.00 region, which encapsulates Friday’s peak and the upper Bollinger Band. However, a successful break higher would clear the way for the 145.00 handle as well as the 78.6% Fibonacci retracement level of the October 2022-January 2023 downtrend at 146.65.
If though, the negative bias strengthens over the next few sessions and the 20-period SMA is breached, the pullback could extend towards the 50-period SMA at 141.84. Steeper losses would see the 141.00 and 140.00 levels being tested before the bears tackle the 50% Fibonacci of 139.58.
Summing up, the current weakness in USDJPY seems temporary and the longer-term uptrend that’s been developing during 2023 remains firmly intact. However, a drop below the 20-period SMA would attract more sellers and should the decline reach the 50-period SMA, the outlook would begin to change to a more neutral one in the short-to-medium term.
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