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USD/JPY Trading flat during mid-February
- The pair is consolidating above 200 SMA with a strong resistance limiting gains.
- A strong pullback occurred towards the 108.30 area, where a bullish trend line provides dynamic support.
The week kicks off with a light calendar in terms of macroeconomic events, as a result of the holidays in the U.S. That’s why the USD is at the mercy of the technical prospects across the board. This makes it a flat situation for the USD/JPY pair, which is trading with limited gains around the 109.90 level. Meaning 0.15% higher than Monday and also consolidating the price action above the 200 SMA at the 4H chart. There is an interesting scenario in terms of price action, as the resistance area of 110.27 caps the gains in the short term.
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A strong resistance is limiting the gains
The spot didn’t manage to consolidate above such a supply region. A strong pullback occurred towards the 108.30 area, where a bullish trend line provided dynamic support from its formation.
The 4H chart is still flat, where the pair trades within a rangebound with no clear direction. However, critical support was formed around 109.22. If a rally happens above 110.27, the next critical resistance of 110.64 should be the upcoming hurdle for buyers. Once it gives up, the doors will open to allow another leg higher towards the 111.18 level.
2020 Lows on the cards
On the flip side, if USD/JPY manages to break below 109.22, a leg lower could happen to reach the 108.71 area. where it will make a confluence with the aforementioned bullish trend line. Beyond that level, the next tough nut to crack would be the 107.59 level. Which is the low of 2020 and can be considered the line in the sand for the sellers.
If it breaks that area, another decline could happen towards the 106.61 level. The RSI indicator remains above the 50 level, favoring the bulls to a first degree, while momentum is pointing slightly downwards.
*OspreyFX would like to state that traders should research extensively before following any information given hereby. Please read our Risk Disclosure for more information.