Technical Analysis of USD/JPY
The USD/JPY has been trading in an uptrend since early June and at 79.77 this morning it is recovering from support with the bulls pushing towards the 80.00 level. With the recent drop in the US dollar, as investors moved to more risk, on the one hand and with the JPY under pressure due to the political turmoil in Japan on the other, the market has been trading sideways in the past week around the 50% Fibonacci level from January’s low to March highs. With the RSI hovering around and above the 50 level since the beginning of June and with the MACD signal line having just crossed above the zero level on the daily chart, the current tightening of the price action could be signalising a major uptrend movement. Once the resistance at 80.89 (61.8% Fibonacci retracement) is cleared, the bull could push the pair all the way up to the next resistance level at 81.70. The bullish alignment of the 20 EMA over the 50 EMA provides further support of the positive outlook in the market. In the alternative scenario, a break below support at 78.84 (38.2% Fibonacci level) could hold back the bulls and open the door for a re-test of the 77.85 support level.
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