USD/JPY has been bearish since the intervention pop. The slide has been a slow crawl, and found support near 76.60 on 11/18. The market is now rising above the 200hour simple moving average, and pushing the RSI reading in the 1H chart above 70. It has tagged 70 twice without falling below 40, a sign of continuing bullish momentum in the short-term. A swing projection for a double 3 correction (WXY) with W=Y relationship, targets 77.50, which is a pivot seen in the 4H chart.
The 4H chart shows the market trading around the 200 SMA. Basically, the intervention pop was overextended to the upside, and the market has fallen back to mean price action in the 200SMA. The RSI is pushing at 60, a break above which reflects loss of the bearish momentum since falling from the 79.52 high. If the market remains bearish toward the pre-intervention pop near 75.60, it should find resistance at the 77.50 pivot.
Above 77.50, then 78.00, we can consider possible scenario that USD/JPY is finally attempting to bottom out, especially if 77.50 is then respected as support. Otherwise, the market is likely to fade the rally back toward pre-intervention low near 75.60. A signal for this short-term bearish outlook would be a break below the countertrend trendline seen established in the 1H chart. An RSI dip in the 1H chart below 40 would also confirm the loss of the current bullish momentum.
Fan Yang CMT is the Chief Technical Strategist FXTimes - provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.