USD/JPY ready to touch ascending trend line; remains positive in the medium-term.
USD/JPY has been moving lower since yesterday’s trading session following the pullback on the 112.15 level. The prices seem to be in progress to hit the medium-term ascending trend line as they slipped below the 20-day simple moving average (SMA). The short-term technical indicators are bearish and point to more weakness in the market.
Having a look at the momentum indicators, the RSI is moving south above the threshold of 50, while the MACD oscillator dropped below its trigger line and is falling in the positive territory, indicating a possible bearish retracement.
If price action remains below the short-term moving average the pair could challenge the next strong support at the 23.6% Fibonacci retracement level of the up-leg from 104.60 to 113.16, around 111.14. A slip below this hurdle and the uptrend line could shift the focus to the downside and there is scope to test the 110.25 support.
However, if the price finds support at the 23.6% Fibonacci and rebounds on it, it would turn higher again and hit the 6-month high of 113.16. Rising above it would see prices re-testing the 113.70 level, taken from high on December 2017.
To sum up, USD/JPY is trying to break below the medium-term ascending trend line, which has been holding since March 23 and if there is a closing day below that obstacle, this would open the way for a new bearish rally.
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