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USD/JPY Strengthening The Bullish Bias
- Positive trend continues across the board-now hovering around the 110.00 neighborhood.
- Bullish wave after a successful rebound above key support
USD/JPY Strengthening The Bullish Bias
January has been quite positive for the USD/JPY pair across the board. Posting new yearly highs, it’s now hovering around the 110.00 neighborhood. Such a bullish wave comes in after a successful rebound above key support that lies around 107.81.
Headlines on the prelude of the Phase-One signing between the US and China have been crossing wires this month, giving a boost to the USD demand against its major competitors in the Forex markets.
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A bullish channel is setting the tone
The spot has been following a bullish sequence since the lows of October 2019. It is now consolidating above the 200 SMA at the H4 chart, favoring the upside in the near-term. However, the golden cross with the 50 SMA in the aforementioned timeframe hasn’t materialized yet, and the price action is waiting for it. Once that happens in the coming days, USD/JPY will look forward to consolidating its price action in the current structure and then rallying towards the 110.65 level, once it breaks above the 110.09 area. The pair could clear out such a zone to extend the gains and put the focus on the 111.57 level to a first degree.
107.80 level in the cards?
To the downside, however, a corrective move should happen in the coming days. The pair should start to make a reversal formation in the H4 chart, according to the candlestick formation. The first support lies at 109.68. If the pair extends the decline below that area, eyes will shift towards the lows from the current year near 107.80, where the lower band of a bullish channel placed in the H4 timeframe is also located. Technical oscillators are showing extreme readings in the short term. The RSI indicator is hovering above the 70 level, calling for an overbought situation. On the other side, Momentum is showing an upside deacceleration, which should favor a leg lower.