Could USD/JPY Continue Upside Rally?
The USD/JPY pair rallied up to 121.23 on Friday, as Yellen’s words late Thursday brought some relief among stocks traders. Indexes traded generally higher in Europe, while US ones started the day with a strong positive tone, fueling USD/JPY demand.
Stocks momentum however, faded over the day and so did the pair, which ended the day with gains anyway, around the 120.60 level. The pair has maintained its range for one more week, clearly limited by Fibonacci levels, as buyers have surged on approaches to 119.35, the 38.2% retracement of the 124.56/11613 decline, whilst sellers cap around the 61.8% retracement of the same rally at 121.35.
In the daily chart, the pair has been developing well below its 100 and 200 DMAs, with the largest converging with the Fibonacci resistance at 122.35, which has clear bearish implications.
The technical indicators in the same chart, held around their mid-lines, with no clear directional strength.
In the 4 hours chart, the technical indicators head lower above their mid-lines, increasing the risk of a short term bearish continuation, to be confirmed on a break below 120.35, the 50% retracement of the same rally and the immediate support.