USD/JPY Returns To Losses; Fragile Below 50-SMA

 

USD/JPY closed Monday’s positive gap by rapidly falling to 131.00 on Tuesday after hitting a wall near the 50-day simple moving average (SMA) at 133.60. Another leg down would ruin the bull’s efforts for a trend reversal.

However, the pair could still maintain the soft ascent from 127.21 if it pivots within the 129.70-129.20 region represented by the 20-day SMA and the surface of the shorter-term bearish channel respectively.

If not, the sell-off may continue towards the previous low of 127.21, while lower, some consolidation may occur near 126.00 before the way clears towards the channel’s lower boundary currently seen within the 124.00-123.50 area.

The technical indicators, however, have yet to confirm a bearish bias. Despite the latest downturn in the price, the RSI managed to hold above its 50 neutral mark, whilst the MACD has barely been affected, gradually extending its recovery within the negative zone.

Nevertheless, the 50-day SMA and the 133.00 zone, where the 23.6% Fibonacci retracement of the 151.93-127.21 down leg is placed, will pose a threat to upside movements in the short term. Buyers would also like to see a higher high above the 133.70-134.45 area before boosting the price up to the 200-day SMA and the 38.2% Fibonacci level of 136.65.

In brief, the sideways move in USD/JPY may continue in the coming sessions as buying interest looks conditional. The pair will need to stay above its 20-day SMA to sustain hopes for a bullish trend reversal, though only a rally above 134.45 would confirm that case.

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