Original article by ActionForex.com
Credit: https://www.actionforex.com/technical-outlook/usdjpy-outlook/607330-usd-jpy-mid-day-outlook-2131/
Rewritten and expanded to at least 1,000 words:
Title: In-Depth Technical Outlook on USD/JPY – June Analysis
The USD/JPY exchange rate is currently exhibiting range-bound behavior, hinting at a short-term consolidation phase following the sharp selloff that occurred in late April and early May. Technical indicators and price action suggest that while the pair is taking a breather, underlying bullish momentum still retains the potential for resurgence, albeit with caution warranted by recent resistance near critical Fibonacci and moving average levels.
This detailed outlook delves into various technical components influencing USD/JPY, including chart patterns, support and resistance levels, momentum indicators, and overall trend structure. The analysis provides traders and investors with actionable insights on potential short-term and mid-term price movements.
Current Technical Overview
– USD/JPY is largely undergoing a sideways correction within a defined consolidation zone.
– The pair remains below its recent peak near 157.70, which acted as a significant barrier to further upside.
– Price action indicates resilience in maintaining levels above 155.00, a critical support point from both a psychological and technical perspective.
Price Structure and Chart Patterns
The broader uptrend remains intact despite the recent retracement. The correction appears to be a natural market reaction to extended bullish momentum seen over the last few months. The pair had surged to multi-decade highs earlier this year, fueled by divergent monetary policy between the US Federal Reserve and the Bank of Japan (BoJ), stronger US data, and carry trade inflows.
Key Technical Elements:
– The pair peaked at 157.70 in late April before retreating in early May.
– The retracement found temporary support near 151.90, just above the 38.2% Fibonacci retracement level of the 140.25 to 157.70 rise.
– Since then, the pair has been carving out higher lows, suggesting that downside momentum may be easing.
Range Bound Consolidation
– Between 153.00 and 157.00, USD/JPY is establishing a clear trading range as consolidation takes hold.
– The current movement suggests a triangle or potential flag pattern formation, common in continuation setups.
– Market participants appear to be awaiting further catalysts from economic data or central bank signals before initiating the next directional move.
These patterns are often characterized by declining volatility and price compression, both of which we are currently witnessing in the pair. This phase can either result in a continuation of the original trend (in this case, bullish) or a reversal upon a breakdown of key support.
Technical Indicators Analysis
Momentum indicators and oscillator readings provide further insight into short-term and medium-term price direction.
1. Relative Strength Index (RSI)
– The 14-day RSI is hovering below the overbought threshold at around the 55-60 region.
– This indicates that momentum is neutral to slightly bullish, supporting the ongoing consolidation without signaling immediate reversal pressure.
2. Moving Averages
– USD/JPY remains well supported above its 20-day and 50-day Simple Moving Averages (SMAs), indicating that the short-term trend is still aligned with the longer bullish cycle.
– The 200-day SMA lies considerably lower, around the 148.00 region, reinforcing how extended and durable the current uptrend has been.
– 20-day SMA currently sits below the price, acting as a dynamic support level around 155.00-155.50.
3. MACD (Moving Average Convergence Divergence)
– MACD lines remain above the zero level but are converging, reflecting a deceleration in bullish momentum.
– A crossover could indicate increased downside risk, though current positioning suggests trend neutrality with potential for upside continuation.
Support and Resistance Levels
Critical price levels remain highly relevant in the absence of a definitive trend breakout
Explore this further here: USD/JPY trading.