USDJPY has pierced below the vital 104.18 trough after the price plunged underneath its simple moving averages (SMAs), breaking the constraints of a short-term sideways market. The diving Ichimoku lines now maintain a strong bearish tone while the falling 50- and 100-period SMAs hold a dictating negative bearing, both suggesting further losses.
The short-term oscillators are reflecting mixed signals in directional momentum. The MACD, far beneath zero, has nudged under its flattened red trigger line, while the RSI has bounced on the diagonal line, set to push above the 30 level. Worth mentioning is the fact that positive divergence is present against the recent lower lows within the price, which could propose some improvement to the upside, should the RSI remain above the diagonal line. Moreover, the stochastic %K line has dropped past its %D line and the 20 level, promoting further weakness in the pair.
To the downside, with a close below the critical 104.18 barrier, the pair may lose additional ground meeting the 103.66 level, which is the 76.4% Fibonacci retracement of the up leg from 101.17 to 111.71. Next, the pair may challenge the 103.09 key trough before sinking to meet the 102.00 handle.
Otherwise, if buyers manage to return the price above the 104.18 mark (previous support-now-resistance), initial resistance may develop from the red Tenkan-sen line at 104.43 ahead of the blue Kijun-sen line at 104.91. Should buying interest survive, the pair may test the 61.8% Fibo of 105.20 and the 50-period SMA of 105.26 overhead. Another leg up could then hit the 105.54 high before encountering the resistance zone from the 100-period SMA of 105.73 until the 200-period SMA of 105.88, where the cloud’s lower band also resides.
Summarizing, the very short-term may confirm its strongly bearish bias should it hold far beneath the resistance section of 106.25 to 106.54. Clear continued red candles under the 104.18 boundary may boost the weakening picture.
