USD/JPY Has Made A Bullish Reversal Today, but Don’t Count Too Much On It
Skerdian Meta • 1 min read
USD/JPY turned bearish last week and it continued to fall further down on Monday this week as the market sentiment deteriorated. Although, in the last few trading session we have seen another reversal, this time to the upside.
But, right now it is not very clear whether this is a genuine reversal if it is a retracement of the bearish trend that we saw last week. But, judging from the price action, I think this might be just a retrace before the next bearish move.
USD/JPY has found solid resistance during the European session at the 100 (red) and 200 (purple) moving averages. The buyers have tried to break above them for several hours but they have failed every time.
Although, the 100 simple MA (green) has turned into support now. It was providing resistance during the Asian session as you can see form the H1 USD/JPY chart above, but it is now acting as support. The market sentiment is still on the negative side and the situation with the Italian budget and Brexit is not helping much. In fact, they might even make the sentiment worse in the coming days.
So, the downside is not complete for USD/JPY yet until major fundamentals find a solution which would make the markets happy. But, that seems unlikely at the moment.
The retrace is complete on this chart
Switching to the H4 chart, we can see that the stochastic indicator is overbought on this time-frame. This means that the retrace higher is complete on the H4 chart as well. The price is also finding resistance at the 100 SMA (red) and if this H4 candlestick closes below it, then chances are that we will see another bearish move during the Asian session tonight.