USD/JPY Technical Analysis: Retreats Below 50-MA, Upside Risks Under Strain

Technical analysis of Forex market

USDJPY has lost its recent footing off the 50-period simple moving average (SMA), as buyers’ latest efforts have become curbed by the mid-Bollinger band at 111.18. Nonetheless, the advancing SMAs are defending the near-term uptrend that evolved from the April 23 trough of 107.47.

The short-term oscillators are transmitting conflicting signals in directional momentum and convincing negative pressures have yet to gain an advantage, despite the pullback from the near 15-month peak of 111.65. The MACD continues to dive beneath its red trigger line, which is still deep in the positive region, while the RSI is struggling to dip past support levels below the 50 threshold. That said, the stochastic oscillator is flirting with the 20 level and has yet to fully confirm a clear price impulse.

If the pair deteriorates beneath the 50-period SMA at 110.93, sellers may meet preliminary friction at the 110.75 obstacle before the spotlight shifts to the support section of 110.41-110.59. Should this base, which encapsulates the lower Bollinger band and the 100-period SMA, break down, the minor uptrend line, pulled from the 107.47 low, and the trailing 200-period SMA, currently at 109.94, could quickly be challenged. In the event that negative pressures defeat these tough diagonal constraints, the price may then sink towards the 109.60-109.78 support boundary.

If the pair regains upside momentum, an initial barricade may arise from the mid-Bollinger band around 111.18 ahead of the 111.34 obstacle. Buyers may then need to assemble a substantial amount of orders to tackle the durable resistance region of 111.48-111.71, the latter being the March 2020 rally high. Should buyers conquer this ceiling, which is fortified by the near 15-month high of 111.65 and the upper Bollinger band overhead at 111.81, they may catapult the price to a zone of resistance formed between the 112.22 and 112.40 rally peaks, from February 2020 and April 2019.

Summarizing, USDJPY seems to be lacking positive drive after the retracement from the recent high. However, the near-term bullish tone has yet to be overturned as the price persists above the 110.41-110.59 base and the tentative uptrend line.