USD/JPY is tumbling to a new five-month low near 106.77 today, struggling within the downward sloping channel.
The RSI is trending south in the oversold zone, while the MACD is heading down below 0, posting a bearish cross with its trigger line. Both are signaling more losses in the daily timeframe.
If the USD/JPY continues lower and drops beneath today’s low, this could open the door for the 105.65 support, taken from the bottom on April 2018. Even sharper losses would bring into range the ten-month low of 104.64.
Should the pair manage to return up it could open the way for the 107.80 resistance level, registered by the inside swing bottom on June 5. However, prices would need to climb as high as the 23.6% Fibonacci retracement level of the downleg from 112.40 to 106.77 near 108.10 and break the bearish pattern to the upside to turn the bias back to slightly bullish.
Concluding, in the short-term, the bearish phase remains in play especially as long as prices continue to trade below 109.00.
by Melina Deltas, XM Investment Research Desk
Melina joined XM in December 2017 as an Investment Analyst in the Research department. She can clearly communicate market action, particularly technical and chart pattern setups. Her technically focused method looks mainly at price action across multiple time frames to capture big moves that develop over the years. She has more than 3 years of experience in analyzing financial markets, specializing in forex, indices, and commodities.
Melina studied Pure Mathematics at Lancaster University and has a Master’s Degree in Monetary and Financial Economics from the University of Cyprus. Currently, she is an associate member of the Society of Technical Analysts (STA) and a Certified Financial Technician (CFTe).
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