Technical Analysis – USDJPY slips from multi-year high but upside still intact



USDJPY has marginally retreated from a more than 4½-year high and directional impetus seems to have somewhat dried up. Nonetheless, the bullish tone in the simple moving averages (SMAs) continues to promote additional gains in the pair.

The short-term oscillators are hinting that buyers are taking a breather, as the indicators appear to be suggesting that positive momentum is feeble. The MACD, some distance above the zero line, has retreated marginally below its red trigger line, while the RSI is sliding further beneath the 70 level. The stochastic oscillator is signalling that positive pressures are currently absent.

If buying interest increases, upside constraints could originate from the 115.50-115.62 resistance zone, which has formed between the March 2017 rally peak and the mid-January high. Should the bulls manage to conquer this resistance border and subsequently the 56½-month high, they would need to also overstep the adjacent upper Bollinger band at 115.66, in order to challenge the 116.34 obstacle.

Otherwise, if negative pressures start to rule again, initial downside deterrence could emanate from the 115.23 level prior to the mid-Bollinger band at 115.00. Dipping below the 115.00 mark, the bears may then encounter the 114.81 low ahead of the 114.48-114.67 support border, forged between the lower Bollinger band and the 50-period SMA. Should a deeper retracement unfold, the pair could then find its feet in the vicinity of the 100- and 200-period SMAs at 114.13 and 114.00 respectively. Otherwise, the price may sink further, targeting the 113.58-113.75 support base.

Summarizing, in the short-term timeframe, USDJPY is sustaining a bullish bias above the 112.72 trough. For negative forces to start to make a mark, the price would need to initially dive underneath the 114.81 low and extend the drop past the SMAs.

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