USD/JPY Technical Outlook
- Bulls pullback, bears take over
- Levels and threshold to consider
USD/JPY- From Hero to Zero
On Feb 20, USD/JPY rallied to 112.22 – its highest level in nearly a year. However, the price fell after, as some bulls seemed to cut back. Later on, the market retreated further and on Friday, the pair printed its lowest in nearly seven months at 104.99, then closed the weekly candlestick in the red with 2.7% loss.
Alongside this, the Relative Strength Index (RSI) dipped below 30 and remained in oversold territory emphasizing the strength of downtrend momentum.
USD/JPY DAILY PRICE CHART (AUG 1, 2018 – Mar 9, 2020) Zoomed out
USD/JPY DAILY PRICE CHART (SEP 1 – Mar 9, 2020) Zoomed in
Looking at the daily chart, we noticed on Feb 28 USD/JPY declined then closed below the 50-day average generating a bearish signal. On Thursday, the pair moved to a lower trading zone generating another bearish signal.
This week, the market has opened with a downward gap and rebounded near the low end of current trading zone 101.55- 104.71. Thus, the price could be on its way for a test of the high end of the zone. Further close above that level reflects bears hesitation. This may cause a rally towards 107.51. Yet, the daily resistance levels underscored on the chart (zoomed in) should be watched closely.
In turn, any close below the low end of the zone could resume bearish price action towards 100.72. Further close below that level might embolden bears to press towards 99.19. That said, the weekly support levels underlined on the chart should be kept in focus, as some traders could exit/join the market around these points.
USD/JPY PRICE four hour CHART (Feb 14 - Mar 9, 2020)
Looking at the four-hour chart we notice on Feb 24 USD/JPY started a downtrend move creating lower highs with lower lows.
Hence, a break below 101.44 could send the price even lower towards 100.86. Although, the weekly support level printed on the chart should be considered. On the other hand, a break above 105.23 may cause a rally towards 105.70. Nevertheless, the weekly daily resistance level marked on the chart would be worth monitoring.
Written By: Mahmoud Alkudsi
Please feel free to contact me on Twitter: @Malkudsi
