USDJPY Consolidates Below SMAs and Ichimoku Cloud

Technical analysis of Forex market

USDJPY has been consolidating since March 27 and has been stuck in a channel tilting slightly to the downside. The neutral to bearish picture in the short-term looks to last for a while longer after price slipped below the simple moving averages (SMAs) earlier this month.

Resistance was met at around the 109.20 region, forcing the pair to reverse lower. The negative bias in the near term is supported by the deterioration in the momentum indicators. The %K line of the stochastic oscillator has fallen sharply into oversold levels. However, the RSI is sloping marginally up in the negative zone.

If prices continue to head lower, support should come from the 106.90 barrier before continuing from stronger losses towards the 50.0% Fibonacci retracement level of the up leg from 101.15 t0 111.70 at 106.43. A drop below this level would reinforce the short-term bearish view and open the way towards the 61.8% Fibo of 105.20.

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However, should an upside reversal take form, immediate resistance would likely come from the 100-period SMA around the 108.13 resistance. A break above it could propel them until the 23.6% Fibo of 109.20, while even higher could send prices to the 111.70 mark.

Overall, USDJPY has been in a neutral to bearish mode in the 4-hour chart, as prices remain beneath the SMAs and the Ichimoku cloud.