USD/JPY trades around 2-month high; extends its bullish rally with next stop 110.00.
USD/JPY extends its gains after the penetration of the 108.20 strong level during Monday’s session. Earlier today the price recorded a fresh more than two-month high of 109.46 and has added more than 250 pips over the last six trading days.
From the technical point of view, in the daily timeframe, the price is developing well above the 50-day simple moving average SMA, while it lost some momentum over the last few hours. The RSI indicator is looking stronger as it enters the overbought zone after the bounce off the 50-neutral level. Also, the MACD oscillator is rising with strong momentum, both suggesting that the price would move north for a while longer.
Currently, there is no obstacle until the 110.00 resistance handle. This level is the 38.2% Fibonacci retracement of the down-leg from 118.60 to 104.60. If the price penetrates 110.00 it could hit the 200-SMA around 110.20, which stands slightly below the next immediate resistance level of 110.50 taken from the peak on January 18.
However, should a downside reversal take form, immediate support will likely come from the 108.20 support level. A break below this level could drive the price towards the next barrier of 23.6% Fibonacci mark near 107.90, which holds slightly above the strong support of 107.80. The next key support to watch lower down is the 50-day SMA around 106.70.
As a side note, the pair has been consolidating within a downward sloping channel since December 2016 and touched the lower boundary at the end of March, creating a 16-month low of 104.60.
All trading involves risk. It is possible to lose all your capital
This information is not considered as investment advice or investment recommendation but instead a marketing communication. This material has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and that it is not subject to any prohibition on dealing ahead of the dissemination of investment research.