Technical Analysis – USDJPY trapped within ascending channel; bias neutral-to-positive
Posted on March 14, 2019 at 8:08 am GMT
Christina Parthenidou, XM Investment Research Desk
USDJPY has been softly rising this week within the 111 area, stretching the three-month long ascending channel even higher. The price is also above its shorter-term moving averages (20- and 50-day Mas) and is set to cross above the 200-day MA as well, giving additional positive trend signals.
In momentum indicators, the RSI continues to fluctuate in bullish territory and seems to be changing direction to the upside today but the MACD and the Ichimoku indicators (Tenkan-sen and Kijun-sen) have yet to show strength as both keep moving sideways, a sign that any gains could appear limited in the near term.
An extension higher could open the door for the 112.30 mark, the previous peak of the recent uptrend and a key support level between October and November. Moving slightly up, the bulls would push hard to break the upper line of the channel seen at 112.75. If efforts prove successful, the rally could continue until the 113.70 resistance.
Alternatively, if the bears retake control, the focus will shift down to the bottom of the channel at 110.95. Breaking that barrier, negative momentum could accelerate, leading the price probably towards the 50-day MA currently at 110.13 and then to 109.59, the 50% Fibonacci of the downleg from 114.54 to 104.64. Lower, the 38.2% Fibonacci of 108.42 could also act as support in case of steeper declines.
In the medium-term picture, USDJPY needs to clear the 114.54 top for the outlook to switch to a bullish one.
Summarizing, the short-term bias looks neutral-to-positive, while in the medium-term the neutral outlook is still intact.