Search ForexCrunch
  • USD/JPY seemed struggling to capitalize on the attempted intraday positive move.
  • The set-up warrants some caution before placing any aggressive directional bets.

The USD/JPY pair failed to capitalize on the early uptick to levels beyond the 109.50 region and met with some fresh supply near 50-hour SMA. Given the occurrence of a death cross on the 1-hourly chart, wherein 50-hour SMA has been drifting away from 200-hour SMA, the technical set-up might have already shifted in favour of bearish traders.

This coupled with the fact that the pair on Thursday broke below an important horizontal resistance breakpoint-turned-support, around the 109.70 region, further add credence to the near-term negative outlook. The mentioned area coincides with 23.6% Fibonacci retracement level of the 107.65-110.29 positive move and should act as a key pivotal point for short-term traders.

Meanwhile, technical indicators on hourly charts maintained their bearish bias and have been losing positive traction on the daily chart. However, oscillators on the daily chart are yet to gain any meaningful negative momentum and thus, warrant some caution before placing any aggressive bets or positioning for any further near-term corrective slide.

Hence, it will be prudent to wait for some strong follow-through selling below the overnight swing lows, around the 109.25 region. The mentioned area marks 50-day SMA, which if broken now seems to set the stage for a slide towards testing sub-109.00 levels (50% Fibo.).

On the flip side, bulls are likely to wait for a sustained move back above the key 110.00 psychological mark. Above the mentioned handle, the might surpass the recent swing highs, around the 110.30 region, and aim towards reclaiming the 111.00 round-figure mark. The momentum could further get extended towards a multi-month-old ascending trend-line resistance, currently near the 111.30 region.

USD/JPY 1-hourly chart