USDJPY’s recent retracement from a near 4-year high of 114.73 has snagged in the vicinity of the 113.00 handle and the blue Kijun-sen line, but upside forces remain vulnerable. The lagging simple moving averages (SMAs) are climbing and continue to back advances in the pair despite growing negative pressures – reflected by the pullback in the price.
The Ichimoku lines are indicating some waning in the positive drive but have yet to confirm negative pressures as the frontrunner. Currently, the short-term oscillators are transmitting conflicting messages in directional momentum. The MACD is in the bullish region but continues to plunge beneath its red trigger line, showing that positive forces are declining. The RSI is pointing up and is flirting with the 50 neutral threshold, while the stochastic %K line has overstepped the %D line in the oversold territory, both suggesting that buyers are pushing back.
If buying powers amplify, initial upside friction could commence from the red Tenkan-sen line at 113.58 ahead of the 114.00 hurdle. Should the price continue to improve, the multiple upper wicks in the 114.30-114.40 area could stall the price from challenging the resistance band of 114.54-114.73, a barrier shaped by the rally peaks from October 2018 and November 2017 respectively. Conquering these obstacles may boost buyers’ confidence to tackle the nearby barricade of 115.07-115.62, which was formed by the highs over the first quarter of 2017.
Otherwise, if sellers resurface and steer the price below the 113.00 mark, the 112.22-112.40 barrier could prove to be the first downside obstacle along with the Ichimoku cloud. Lurking slightly beneath is the 50-day SMA at 112.04 and the cloud’s lower band at 111.88. If a deeper retreat in the pair evolves past these barriers, the price could then encounter its next support in the 110.82-111.19 zone, where the 100-day SMA also resides. Persistent selling in the pair may then turn trader’s attention to the 110.07 boundary and the 200-day SMA at 109.85.
Summarizing, USDJPY is sustaining a bullish tone above the 112.22-112.40 barrier, the cloud and the SMAs. That said, for the positive structure to start to become seriously compromised, the price would need to dip below the 110.82 low.
