Forex Technical Update
The USD/JPY has been in a rally since being supported at the 61.8% retracement of the 76.56 to 78.27 swing. The 4H chart shows a market at the crossroad. The ability to respect 61.8% retracement, and push back above the 200 period simple moving average are signs of bullish bias. However the RSI reading shows loss of bullish momentum, and even establishment of bearish momentum as it broke below 30. Overall, the momentum has been neutral in the medium term as the RSI reading oscillates from below 30 to above 70 and back. Now as we enter the US session, if the market respects the channel resistance, and the RSI stays below 60, we still have a short-term bearish outlook in a medium term ranging market that has picked up some bullish bias. A break below 77.50 opens up the 77.00 area, near the 78.6% retracement level.
However a break above the channel resistance, and a close above 78.00 opens the bullish continuation scenario. First the near-term resistance is at the 78.27 high. The the swing projection seen in the daily chart targets 78.75 area. As the market approaches 79.00, it will be nearing the 200day SMA. This will be a moment to test major resistance in the 79-80 area. The bottom building process can not be confirmed until the clearing the 200SMA and this resistance zone.
Fan Yang CMT is the Chief Technical Strategist FXTimes - provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.