Decisive Time for USD/JPY, Turn Bearish or Remain Bullish?

USD/JPY has been retracing lower last week, but it is finding support at the 200 SMA now on the daily chart

A bullish reversing pattern is forming on the daily chart

[[USD/JPY]] turned bullish on the second trading day of this year after it lost more than 4 cents earlier that day. Since then the trend has been really straightforward; push higher, make a small retrace lower and then continue higher again, rinse and repeat. The price broke 1.10, 1.11 and 1.12.

Although, last week the sentiment turned negative in the financial markets as three major central banks turned dovish with the ECB and the OECD revised growth and inflation predictions lower for 2019 and 2020. That goes for the major economies as well as for the global economy.

As a result, risk assets such as stock markets declined, while safe havens such as the JPY increased. Hence the bearish reversal in USD/JPY last week. But, this just might be a retrace before the next bullish move higher. The price fell to the 200 SMA (purple) last Friday.

This moving average provided resistance during most of February and now it is possible that it turns into support. The 100 SMA is hidden below the 200 SMA, so the support is going to be stronger if that’s the case. These two moving averages stand at 1.11 which is also a big round number, so the bullish reversal seems increasingly probable now. But, the stochastic indicator is not oversold yet, which means that the retrace lower is not complete. But, who knows, the support might be stronger than the bearish momentum.

ABOUT THE AUTHOR See More
Skerdian Meta
Lead Analyst
Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.

Related Articles

Comments

0 0 votes
Article Rating
Subscribe
Notify of
0 Comments
Oldest
Newest Most Voted
Inline Feedbacks
View all comments

HFM

Doo Prime

XM

Best Forex Brokers