USD/JPY Technicals Show Chance for Major Move Lower
The Japanese Yen strengthened against the US Dollar for a second week, with USD/JPY slicing below its 50-day Simple Moving Average (SMA) in the process. This comes after the pair rose to its highest level since January 2017 earlier this month.
The formation of a Bearish Engulfing Candlestick on the weekly chart sent a signal to Yen bulls last week. That, along with rejection from the 61.8% Fibonacci retracement, highlighted a strong level of resistance. The Relative Strength Index (RSI) is also showing some bearish divergence (highlighted by the red line in the chart).
Altogether, it looks like USD/JPY could be at the start of a longer-term downtrend. If so, a drop to the 38.2% Fib at 109.26 may be on the cards.
The formation of a Bearish Engulfing Candlestick on the weekly chart sent a signal to Yen bulls last week. That, along with rejection from the 61.8% Fibonacci retracement, highlighted a strong level of resistance. The Relative Strength Index (RSI) is also showing some bearish divergence (highlighted by the red line in the chart).
Altogether, it looks like USD/JPY could be at the start of a longer-term downtrend. If so, a drop to the 38.2% Fib at 109.26 may be on the cards.