Thursday, May 28, 2020
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Technical Analysis – USD/JPY plummets towards 108

USD/JPY plummets towards new 5-month trough around 108.

Since its deep fall towards five-month lows near 108.00 today, USD/JPY has been plunging back below the 50.0% Fibonacci retracement level of the up leg from 104.64 to 112.40 near 108.55, creating a base beneath the short-term moving averages. The technical picture supports that the aggressive downfall is likely to continue in the short-term.

The %K line of the stochastic oscillator has fallen sharply into oversold levels and posted a bearish crossover with the %D line. Also, the RSI is dropping below the 30 level, suggesting more downside movement.

If prices continue to head lower, support should come from the 107.80 support and the 61.8% Fibonacci region of 107.60. A drop below this area would reinforce the short-term bearish view and open the way towards the 105.65 level, taken from the bottom on April 2018 before edging until the ten-month low of 104.64.

However, should an upside reversal take form, immediate resistance will likely come from the 108.40 – 108.55 zone. A break above these levels could send the market until the 109.00 psychological level before re-challenging the 38.2% Fibonacci of 109.45.

Summarising, traders should be waiting for a strong rebound before placing positive orders as the recent profile is negative in the near-term. A daily close under the 61.8% Fibonacci (107.80) could endorse the bearish outlook.


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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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