Thursday, June 4, 2020
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Technical Analysis – USD/JPY hovers below 109

USD/JPY hovers below 109; descending channel holds in the near term.

USD/JPY has been on the sidelines for the most part of the week as the 109.00 level seems to be a real obstacle for the bulls. Over the last seven weeks, the pair has been developing in a descending channel, erasing the bullish retracement from the 104.64 support.

Technically, the price could lose some ground in the short-term as the RSI is moving downwards in the negative area, while the stochastic is creating a bearish cross within the %K and %D lines.

A continuation of the rebound from the five-month low, could meet strong resistance between 108.80 and 109.00, where the 20-day simple moving average (SMA) is located. Exiting the channel, the 38.2% Fibonacci of the upleg from 104.64 to 112.40 near 109.45 could halt further advances.

Alternatively, a decline under five-month low (107.80) should keep the pair in a bearish mode, challenging the immediate support of the 61.8% Fibonacci region of 107.60. A strong rally below this line could open the way towards the 105.65 hurdle, identified by the low on January 2018.

In the short-term picture, USD/JPY is gently pointing down after the bounce off the four-month high of 112.40. Only an upside run above the aforementioned obstacle could turn the bias back to bullish. Otherwise, traders will most likely look for negative movements.


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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.

Source: XM

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