Technical Analysis – USDJPY reverses off 50.0% Fibonacci, back below 100-SMA

Anthony Charalambous, XM Investment Research Desk

USDJPY sellers are persisting at the 100-day simple moving average (SMA) currently at 107.80, despite short-term momentum drying up, as implied by the flattening Tenkan-sen and Kijun-sen lines. The pair aggressively pivoted off the 108.42 resistance, which is the 50.0% Fibonacci retracement of the down leg from 112.39 to 104.45, following a rally that commenced on August 26.

The short-term oscillators reflect a stall in price action as the MACD has weakened in the positive area, moving below its red trigger line, while the RSI is flirting with the 50-level, presently in the bullish territory. Moreover, although the SMAs retain their bearish view, traders need to keep in mind that the momentum indicators are still in bullish regions, and the Tenkan-sens’ bullish cross is still valid.

If the 100-day SMA holds and sellers’ presence picks up, initial support comes from the 38.2% Fibo of 107.50. Moving lower into the Ichimoku cloud past 107.20, the price could tackle a more challenging support of 106.77 where the 40-day SMA also lies. Surpassing this, could drop the price to test the 23.6% Fibo of 106.32 before a sell-off to the 105.05 can evolve ahead of the multi-year low.

To the upside, if the bulls retake control climbing above the 100-day SMA at 107.80, the swing peak of 108.42 is next to apply the brakes. Driving higher, the resistance region of 109.00 to 109.37 would need some muscle to surpass, as the 200-day SMA is enclosed within it.

Overall, the medium-term bearish bias overpowers the neutral short-term view, but a move above the 109.92 would instill positive dominance.