USDJPY turned green after its latest sharp bearish wave paused at an almost two-month low of 130.38 on Tuesday, with the price quickly recouping Monday’s losses in the aftermath.
While the RSI and the Stochastic oscillator are flagging oversold conditions as the indicators pivot northwards after tumbling to 30 and 20 respectively, there are several obstacles ahead, which could still ruin any additional bullish efforts.
First, the pair remains trapped within the Ichimoku cloud for the third consecutive day and below the 133.20 level, while not far above, the red Tenkan-sen line could also squeeze the pair with the help of the 50-day simple moving average (SMA) seen at 134.50. Higher, the bulls will need to successfully climb back above the broken tentative ascending trendline and the 20-day SMA at 136.00 in order to gain access to the 20-year high of 139.37.
On the downside, sellers will look for a close below the cloud at 131.53 and yesterday’s trough of 130.38 to drive the price towards the 128.85 handle. Beneath the latter, the next target will be May’s low of 126.35, where any violation would signal a bearish trend reversal in the big picture.
Summing up, USDJPY has not escaped the downward path despite showing an appetite for recovery. Unless it rallies back above 136.00, sellers may remain active in the market.
