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Technical Analysis – USDJPY looks overbought near March’s peak
May 2, 2023 8:29 amVideo
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USDJPY staged an impressive two-day rally of 2.5% after refusing to cross below its exponential moving averages (EMAs) and the support trendline from April’s low.
Tuesday’s session has been relatively calmer so far as the March peak of 137.90 came into sight. Technically, some profit taking may occur as the RSI and the stochastic oscillator flatline in overbought territory. The weakening momentum in the MACD is backing this narrative too.
Nevertheless, if the pair finds enough buyers to pierce through the 137.90-138.00 wall, it may experience another fascinating rally towards the 139.40-140.00 region since there are no important obstacles until that area. The 140.75 barrier from last November could be the next challenge.
Alternatively, if the warning overbought signals are correct, the pair may retest the 137.40 nearby support zone before plunging towards 136.70. Another failure here could squeeze the price towards the 20-period EMA and the broken resistance line both seen at 136.20, while lower, the pair may take a breather near 135.55.
Summing up, the latest advance in USDJPY is looking overdone in the four-hour chart, increasing the odds for a downside correction. If the 137.40 base proves fragile, selling pressures may strengthen. Otherwise, traders may wait for a close above 138.00 before they target higher levels.
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