Daily Report: USD/JPY on track to snap winning streak

Steffy Bogdanova
May 2, 2023 6:49 pm

This article was submitted by Aaron Hill from FP Markets.

USD/JPY Testing Weekly Resistance

Higher up on the curve, it is clear that the currency pair is testing the underside of a key resistance level on the weekly timeframe at ¥137.23. Should price close at current levels, this would deliver a weekly shooting star candlestick pattern, an individual bearish candlestick formation that could signal further selling.

Harmonic traders will also acknowledge that directly above the resistance level, there is a 100% projection ratio at ¥140.34: an equivalent AB=CD bearish pattern that shares chart space with a 50% retracement at ¥139.57. To the downside, a decision point calls for attention at ¥126.40-¥131.30.

200-Day SMA Active on the Daily Chart

Following three consecutive days of upside, sellers put in an appearance today. On track to snap recent gains, price action on the daily timeframe is poised to close back under the 200-day simple moving average, currently fluctuating around ¥136.98. Therefore, the dynamic SMA value is set to offer technical resistance again, similar to what we saw on 8 March. This is also in line with the Relative Strength Index (RSI) recently skimming the lower side of the overbought threshold.

In one fell swoop, on the H1 timeframe, price action drove through ¥137 and support coming in at ¥136.79-¥136.58. As you can see, the unit is engaging with the lower boundary of ¥136.79-¥136.58 and offering resistance. Additional selling is potentially on the table here. Not only is there room to continue pushing for at least the ¥136 handle (shares space with the 38.2% Fibonacci retracement ratio at ¥135.96), there is room to manoeuvre lower on the RSI from the H1 chart after demolishing the 50.00 centreline.

USD/JPY Direction

Having noted price movement testing the mettle of weekly resistance at ¥137.23 and daily price on the verge of reclaiming space back under the 200-day simple moving average (aided by an RSI oversold signal), this appears to be a sellers’ market for the time being, at least technically speaking.

While there is a chance that weekly price could spike to its 100% projection at ¥140.34, H1 sellers may hold the underside of the current resistance at ¥136.79-¥136.58 and attempt to push for ¥136.

USD/JPY on Track to Snap Winning Streak, FP MarketsCharts: TradingView

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Opinions are personal to the authors and do not reflect the opinions of LeapRate. This is not a trading advice.

LeapRate Analyst

Experienced writer and journalist, working in the global online trading sector, Steffy is the Editor of LeapRate. She has previous experience as a copywriter and has been with the company since January 2020. Steffy has a British and American Studies degree from St. Kliment Ochridski University in Sofia.
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