USD/JPY buyers seem to have a challenging resistance region of 107.49 – 107.80 to overcome, ahead of the restrictive 108.42 level, which is the 50.0% Fibonacci retracement of the down leg from 112.39 to 104.45. Although the price action is skewed to the downside, it remains between the 50- and 100-day simple moving averages (SMAs).

The short-term oscillators and the flat Tenkan-sen suggest that directional momentum has evaporated. The MACD has distanced itself under its red trigger line, barely holding above the zero level, while the RSI is currently flat around its 50-neutral mark.

If the resistance region of 107.49 to 107.80 holds, the drop could be interrupted at the support area of 106.88-106.77, which includes the 50-day SMA -presently at the upper boundary of the Ichimoku cloud. Through the cloud, the 23.6% Fibo of 106.33 could apply some pressure. Breaching lower, the pair could rest at the 105.73 swing lows, before eyes turn the multi-year low of 104.45.

To the upside, if the bulls manage to push above the 100-day SMA the price could rally to re-test the 50.0% Fibo of 108.42. Climbing higher the 109.00 handle and nearby 200-day SMA could challenge the buyers ahead of the swing peak around the 61.8% Fibo of 109.35.

Overall, the short-term bias is looking neutral-to-bearish. A break above 108.42 would confirm a neutral bias while a drop under 106.33 could revive the bigger negative picture.


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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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