USD/JPY: The pace of the run higher has just begun to dissipate slightly [Video]

USD/JPY

The sharp uptrend channel of the past two weeks has continued higher and is now within touching distance of the key February high of 112.20. However, the pace of the run higher has just begun to dissipate slightly in the past couple of sessions, with only marginal positive closes, but also including long lower shadows on the candlesticks. Coming into the European session., the early decline is also playing into this. The long lower shadows of the past two sessions are warnings that the sellers (profit-takers) are threatening to mobilize, but cannot quite get their ducks in a row yet. It will be interesting to see how the Europeans respond to this early decline. A failure to buy into the weakness could suggest that the bull run is waning. We have mentioned the consistent use of the Fibonacci retracements (of 112.20/101.20) on numerous occasions during the two week bull run. Once more, this was seen in yesterday’s session, where the 76.4% Fib (at 109.60) became a basis of support (for yesterday’s low at 109.65). This level takes on added importance now, were it to be broken (especially on a closing basis) as it complete a small top pattern on the hourly chart (that would be confirmed below support at 109.30. It is interesting to see RSI just beginning to roll over this morning, back under 60, whilst Stochastics are also beginning to tick over. Resistance has been left initially at 111.60 under the key 112.20 February high. There are marginal negative divergences developing on hourly RSI and hourly MACD. Hourly RSI under 40 and hourly MACD under neutral would suggest development of a corrective move.