USD/JPY erases gains after hitting a wall at 109.
USD/JPY is recording its second day of losses after a failed attempt to break significantly above the 109 round level on Tuesday. Chances for a reversal, however, are decreasing as the 20-day simple moving average dropped below the longer-term 200-day MA after six months, while the red Tenkan-Sen line has a steeper negative slope now, suggesting that the next move in the price is more likely to be down. The MACD continues to strengthen to the downside and below its red signal line, supporting this view as well.
Another step lower may reach key support at 107.50, where the price stopped last Friday. Should this prove a weak obstacle, the selling could pick up speed until the 106.45 level, where any violation would bring more pressure to the market with the price probably stretching further down to test the 106 and 105 marks.
Alternatively, in case of a rebound, immediate resistance could come from 108.36, the 23.6% Fibonacci of the down-leg from 114.54 to 106.45 before the focus shifts to the 109 level again. Higher, the 38.2% Fibonacci of 109.53 could also restrict upside movements, though only a close above the 50% Fibonacci of 110.48 would confirm the start of an uptrend.
In the medium-term picture, the pair is still increasingly bearish as long as it holds well below 111.38, the October 26 low, and more importantly under the 200-day MA, which is still rising.
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