USD/JPY outlook: Recovery gains pace but strong obstacles lay ahead
USD/JPY
The USDJPY bounces on Monday after Friday’s action left long-tailed Doji, with short-lived dip below psychological 130 support signaling a bear-trap and forming reversal pattern on daily chart.
Initial signal of direction change still needs more evidence, with break of daily cloud base (131.81), seen as a minimum requirement, with extension above the cloud top (132.69) needed to confirm reversal.
Daily cloud twists on Friday and was so far magnetic, though prevailing negative tone on daily studies (rising negative momentum / moving averages in full bearish setup) may cause more significant negative impact on fresh bulls, which already came under pressure on 4-hr hart (fading bullish momentum / overbought stochastic).
Slight optimism on easing tensions in banking sector prompted traders into dollar from safe-haven yen, however persisting concerns that crisis may deepen, as markets are not convinced that the worst is already behind us, continue to weigh and require caution.
Look for initial signal on today’s closing and reaction at daily cloud base.
Res: 131.81; 132.37; 132.70; 133.00.
Sup: 130.98; 130.74; 130.00; 129.64.
Interested in USD/JPY technicals? Check out the key levels
Author
Slobodan Drvenica
Windsor Brokers
Industry veteran with over 22 years’ experience, Slobodan Drvenica joined Windsor Brokers in 1995 when he was an active trader for more than 10 years, managing the trading desk and own account departments.
