Technical Bias: Bullish
Key Takeaways
“¢ US dollar suffered a major setback against the Japanese yen, as investors continue to search reasons to dump the US dollar.
“¢ A long term bullish trend line in play for the USDJPY pair.
“¢ USDJPY support seen at 100.90 and resistance ahead at 101.80.
The Japanese yen recently took the advantage of the US dollar weakness and traded higher to register a massive weekly gain. However, the currency pair is reaching a critical support area, which might hold the downside in the US dollar moving ahead.
Technical Analysis
There is a monster trend line on the daily timeframe for the USDJPY pair, which is also coinciding with the 50% Fibonacci retracement level of the last major leg from the 96.52 low to 105.36 high at 100.97. Moreover, the USDJPY pair has managed to bounce more than a couple of times from the mentioned confluence area of 100.80. The pair is again heading towards the stated support area, and it would be interesting to see whether the US dollar sellers could manage to break the all-important support level to set the medium term trend. The pair was down yesterday after posting a daily high at 101.59. USDJPY is consolidating the recent losses from the drop out of the 102.00 handle.
Two Key Bearish Signs
There are two bearish signs to note, which could result in a break moving ahead. First, the USDJPY pair is trading below all three key simple moving averages (200, 100, and 50) on the daily timeframe, and the second one is that the RSI is well below the 50 level. However, we cannot deny that the 100.80 is a very critical support area, and the pair might bounce sharply from the mentioned zone.
Alternatively, if the pair breaks the trend line and moves lower, then a test of the 61.8% fib level at 99.90 cannot be denied in the short term. Overall, as long as the pair stays above 100.80 level, the chance of a bounce back is more compared to a break lower.
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