IKOFX Daily Market Analysis

[team.ikofx]

GBPUSD Likely To Find Buyers Around 1.7080

The British pound is trading slightly lower against the US dollar. The GBPUSD pair traded above the 1.7150 level more than twice, but failed to break the critical resistance area. This has increased the bearish pressure on the GBPUSD pair. There is a bullish trend line forming on the 4 hour chart for the pair, which might act as a support for the pair in the short term. The most important point to note from the charts is that the mentioned trend line is coinciding with the 100 moving average (4H), which increases the significance of the trend line.

The GBPUSD pair is currently consolidating around the 23.6% fib retracement level of the last move higher from the 1.6919 low to 1.7175 high. Moreover, the 38.2% fib level is around the 1.7075 level, which is very close to the highlighted trend line. If the pair moves closer to the bullish trend line, then buyers might put up a fight to hold the downside in the pair. It is very likely that they could succeed in doing so, which would again open the doors for a test of the previous high of 1.7170. The only negative thing to note at present is that the RSI on the 4 hour chart has breached the 50 level, which might encourage the British pound sellers in the short term.

Alternatively, if the pair breaks down, and closes below the mentioned trend line, then a test of the 61.8% fib level at 1.7020 cannot be denied. Any further strength might take the pair towards the 200 SMA (4H), which is currently at 1.6950.

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[team.ikofx]

US Dollar Awaits Yellen For A Break

The US dollar is mostly consolidating in a range against the Swiss franc, and waiting for a catalyst for a larger move. There is a major risk event lined up later during the NY session. The fed chairwoman Janet Yellen is scheduled to testify, which can cause a lot of movements in the US dollar. So, one should be very careful trading around the mentioned risk event. There is an economic release as well – the US retail sales data will also be published later today.

There is a bearish trend line connecting all recent highs on the 4 hour timeframe for the USDCHF pair. The pair is again heading towards the mentioned trend line and it is very interesting that the timing is coinciding with major risk events. So, it is likely that the pair might test the highlighted trend line and fail to break it if the risk events turn out to be on the negative side for the US dollar. The pair is currently flirting with the 38.2% fib retracement level of the last drop from the 0.9035 high to 0.8856 low. If the US dollar manages to clear the mentioned trend line, then it might face hurdle around the 50% fib level, which also coincides with the 200 simple moving average on the 4 hour timeframe. If buyers gain momentum, then it might even challenge the last swing high of 0.9000 level in the short term.

Alternatively, if the pair fails to break higher, then it might find support in the form of the last swing low at 0.8900 level. However, considering the risk events it is likely to trade back towards the previous low of 0.8856.

Overall, as long as the pair is trading below the bearish trend line a move lower cannot be denied.

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[team.ikofx]

EURUSD Breaks Uptrend, More Losses Ahead?

The US dollar was seen trading higher yesterday against most of its counterparts, including the Euro. The Euro also got hit by the disappointing German ZEW economic sentiment, which declined from 29.8 to 27.1. Later, the US retail sales data added fuel to the downside in the pair, followed by the Yellen’s testimony. The EURUSD pair broke an important support area to register a healthy decline yesterday. There was a bullish trend line on the 4 hour chart, which was breached by the Euro sellers, as the pair traded below the 1.3580 level.

The most important point was that the pair also broke the 50% fib level of the last move higher from the 1.3503 low to 1.3699 high, and the 200 simple moving average on the 4 hour chart. This signifies a break of the recent uptrend in the EURUSD pair, which might take the pair towards the last low of 1.3500 level. It is possible that the pair might correct higher from the current levels, but if it does so, then it could be seen as a selling opportunity. The Euro sellers are likely to reappear around the broken trend line and the 200 SMA (4H) confluence area.

Moreover, it is also possible that the pair fails to retrace substantially from the current levels, and continue heading lower. Immediate resistance can be seen around the 1.3580 level, followed by the 1.3600-10 resistance area.

So, as long as the pair is trading below the broken trend line and the 200 SMA, then selling rallies might be a good option in the short term. The US Producer Price Index (PPI) data will be released by the US Bureau of Labor Statistics later today, which can cause swing moves in the pair.

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[team.ikofx]

GOLD Nosedives, Finds Buyers Around An Important Support Area

GOLD traded higher for a couple of weeks earlier, but during this week the precious metal struggled to hold the ground, as the US dollar was seen gaining momentum against almost all major currencies. GOLD started the downside ahead of the Fed’s Yellen speech and continued its decline after the speech as well. There was an expanding triangle formed on the 4 hour chart for GOLD, which was breached by sellers earlier during this week. This particular break can be considered as very important, as GOLD was continuously finding buyers around the mentioned triangle support trend line.

After GOLD broke the triangle support trend line it fell towards the 38.2% fib level of the last move higher from the $1240 low to $1345 high. It managed to climb back up, but found sellers around the broken triangle trend line. Later, it fell sharply and traded close to the 50% fib level, which was also coinciding with the 200 moving average on the 4 hour timeframe. So, this support holds a lot of importance for GOLD buyers, and it is very likely that it might rise back towards the $1310 level from the current levels.

The RSI on the 4 hour timeframe seems to be recovering from the extreme levels, which is a positive sign, but it does not mean that the yellow metal can gain momentum easily. The $1310-15 level might act as a strong barrier for GOLD in the short term.

Overall, as long as the prices stay below the mentioned levels, then one might consider selling rallies. However, there is a possibility that GOLD would consolidate for some time around the current levels.

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[team.ikofx]

British Pound Looming Around Critical Support Against US Dollar

The British pound was seen trading lower against the US dollar Intraday, as the market failed one more time to break above the 1.7200 resistance level. However, the pair did manage to set a new yearly high this time, but the margin was of only few pips. The most important thing to note from the charts is that the GBPUSD pair has managed to close below the 100 simple moving average (SMA) on the 4 hour chart, which can be considered as a short-term bearish signal.

There is one more side of the coin, as the bullish trend line as highlighted in one of the previous analysis still remains intact for the pair. Currently, the GBPUSD pair is flirting around the same mentioned trend line. This trend line is also coinciding with the 38.2% fib retracement level of the last leg higher from the 1.6919 low to 1.7191 high. If the British pound sellers manage to break the trend line, then it might call for a move towards the 50% fib level, followed by the 61.8% fib level. Any further losses could take the pair towards the 200 SMA (4H) in that situation.

There is also a possibility that the pair might jump from the current level. In that situation, the pair might again challenge the 1.7180-90 resistance area. However, this particular scenario looks a bit difficult considering the current market sentiment.

The RSI on the 4 hour chart is also below the 50 level, which adds value to the bearish view. So, if the pair breaks lower, then the chance of a sharp move down is very likely in the short term.

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[team.ikofx]

EURUSD: Break Above 1.3535 Exposes A Run Towards 1.3565

The Euro got slammed against the US dollar during this past week, as the market sentiment favoured the US dollar. The EURUSD broke the all-important 1.3500 support level to trade as low as 1.3491. However, this break was not sustainable, as the EURUSD pair jumped sharply to close the week above the 1.3510 level. This can be seen on the positive side, as such moves can sometimes be considered as a false break or a stop hunt.

There is a bearish trend line formed on the 4 hour chart for the EURUSD pair, which is acting as a resistance in the short term. However, the pair has breached the 23.6% fib retracement level of the last drop from the 1.3640 high to 1.3491 low. So, this has opened the door for a test of the 50% fib level in the short term. However, the EURUSD pair needs to break the trend line to confirm. If the pair manages to clear the trend line, then a test of the 38.2% fib level, which also coincides with the 100 hourly moving average is possible. More gains might take the pair towards the 50% fib level at 1.3565.

It is also possible that the pair might not be able to break the trend line. In that situation, immediate support can be seen around the 1.3512 level. A break below the mentioned support level might call for a retest of the last low of 1.3491.

The RSI on the 4 hour chart has breached the 50 level, which is a positive sign. However, as mentioned earlier the pair needs to break the trend line in order to confirm a short-term trend.

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[team.ikofx]

AUDUSD Registers Another Failed Attempt To Break Higher; Courtesy RBA’s Stevens

The Australian dollar has a massive resistance around the 0.9390-0.9400 level against the US dollar. The AUDUSD pair has tried more than twice to break the mentioned resistance level and settle above it, but every time it breaks the resistance sellers appear to push the pair down again. Earlier during the Asian session, the Reserve Bank of Australia Governor Glenn Stevens was scheduled to deliver a speech. For a change, he did not speak about the rising Australian dollar, and mentioned that “the highly accommodative financial conditions will then have a more powerful effect in engendering real growth”, according to a report published on Bloomberg.

The AUDUSD pair spiked higher to break a bearish trend line on the hourly chart, but that turned out to be a false break, as the pair failed to close above the trend line. The most important point to note here is that the mentioned trend line is coinciding with the 50% fib retracement level of the last drop from the 0.9455 high to 0.9330 low. So, this particular failure can be seen as critical, and might encourage the Aussie sellers in the short term. The pair might turn lower from the current or a bit higher levels. Initial support can be seen around the 200 hourly moving average at 0.9380, followed by the 100 hourly moving average at 0.9370.

It is also possible that the pair might not fall from the current levels. In that situation, if the pair breaks the trend line and settles above the 50% fib level, then it could open the doors for an upside momentum towards the 0.9420 resistance level.

Any further gains should be limited by the previous high of 0.9450. Overall, as long as trend line holds more downside is possible.

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[team.ikofx]

British Pound Eyes Carney For A Break

The British pound traded a touch lower against the US dollar yesterday after the US CPI release, but later managed to recover most of the lost ground. The GBPUSD pair traded as low as 1.7041, and then bounced back towards the 1.7070 level earlier during the Asian session. There are two important levels to keep an eye on – first one is a support at 1.7040 level and the second one is a resistance at 1.7090. A break on either side might trigger swing moves in the GBPUSD pair in the short term. The Bank of England’s Governor Mark Carney will be delivering a speech later today, which could act as a catalyst for the British pound during the late London session.

There is a trend line formed on the 4 hour chart for the GBPUSD pair, which has held the downside in the pair on a number of occasions. The most important thing as of now is that the 200 moving average is sitting right around the trend line support area. So, if the pair moves lower from the current level, then the mentioned support area at 1.7022 might act as a tough barrier for the British pound sellers. If they fail to break the same, then a bounce back towards the 1.7070 resistance level would be on the cards.

It is also possible that the pair might not fall from the current levels. In that situation, the pair could break the 1.7070 resistance level and challenge the next barrier at 1.7090. A break above the 1.7090 level will be very difficult, and would largely depend on Carney’s speech. So, we need to watch this particular event closely and trade accordingly.

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[team.ikofx]

USDJPY Remains Supported On Dips

There was no major economic release lined up yesterday in the US, and as a result the US dollar mostly traded in a range against the Japanese yen. However, there is no denial that the USDJPY pair is under bullish pressure, as there are a lot of signs, which point towards more strength in the pair moving ahead. First one is that the pair is trading above the 100 and 200 hourly moving average, and the second one is that it has managed to clear the 61.8% fib retracement level of the last drop from the 101.79 high to 101.11 low. So, it looks like that the pair might trade higher in the coming sessions, and may be towards the last high of 101.79.

However, the 101.60 level is a major hurdle for the pair in the short term, and that is the reason why the pair might dip one more time before it breaks higher. There is a bullish trend line formed on the hourly chart for the USDJPY pair, which might act as a support for the pair on the dips. The mentioned trend line is now moving along with the 100 moving average, which is a positive sign and escalates the importance of the trend line support area. So, the 101.40-30 support levels hold the key for the pair in the short term.

It is also possible that the pair might not retrace from the current levels and break higher. In that situation, initial resistance can be seen around the 76.4% fib retracement level, followed by the previous swing high of 101.79.

The US initial jobless claims and new home sales data will be published later during the NY session, which is likely to act as a catalyst for the pair moving ahead.

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[team.ikofx]

Euro Likely To Trade Higher In The Short Term

The Euro managed to find buyers around the 1.3440 support level against the US dollar. The Euro zone manufacturing and services PMI which were released during the yesterday’s London session came better than expected and ignited a solid bullish momentum for the EURUSD pair. The pair traded higher close to the 1.3490 resistance area where sellers appeared again. It is under retracement as of writing, and waiting for the economic releases lined up later today.

The upside in the EURUSD pair yesterday stalled right around an important bearish trend line on the 4 hour chart. However, there is a monster bullish candle formed on the hourly chart, which might encourage the bulls in the short term. Currently, the mentioned trend line is also coinciding with the 23.6% fib retracement level of the last down-move from the 1.3639 high to 1.3437 low. So, a break and close above the mentioned trend line might call for more gains in the pair moving ahead. Initial resistance can be seen around the 38.2% fib level at 1.3515, followed by the 50% fib level at 1.3540.

Alternatively, if the pair fails to break the bearish trend line and moves lower again, then the 1.3440 support level could hold the downside in the pair. A break below the mentioned level might ignite more losses in the EURUSD pair, which could take it towards the 1.3400 level.

The hourly RSI is bouncing from the extreme levels, and it is likely to continue gaining momentum. There are few economic releases lined up later during the London session, which might act as a catalyst for the pair in the short term. The bottom line is that the chance of pair trading higher is more moving ahead.

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[team.ikofx]

Euro Might Correct In The Short Term

The Euro moved lower against the US dollar during this past, and traded as low as 1.3421. The EURUSD pair is currently consolidating in a range of 15 pips. There is a chance that the pair might retrace from the current levels, as it has already moved a lot in the recent days. Moreover, the hourly RSI is also around the extreme levels, which means that there might be a retracement sooner or later.

There are two trend lines formed on the hourly chart for the EURUSD pair. First one has managed to hold the downside on a couple of occasions, and second one can be considered as a bearish trend line, as it has held the upside. If the pair manages to retrace from the current levels, then it might move closer to the 38.2% fib retracement level of the last drop from the 1.3475 high to 1.3421 low. It is also possible that the pair could test the 50% fib level before sellers appear again. Any further strength should be limited by the highlighted bearish trend line.

Alternatively, if the pair fails to trade higher and breaks the 1.3421 support level, then a test of the all-important 1.3400 level might be on the cards. Moreover, the 1.3380 level is also very critical, and the Euro buyers might appear around these levels to hold the downside in the pair.

The US services PMI and pending home sales data will be published later today. The Euro’s fate in the short term depends a lot of the upcoming economic data. Overall, a short-term correction is a possibility unless something emerges as a market moving event.

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[team.ikofx]

US Dollar Likely Heading Towards A Major Resistance Against The Swiss Franc

The US dollar is trading higher against the Swiss franc, as the US consumer confidence data which was released yesterday jumped sharply. The US consumer confidence registered a reading of 90.9, which is a 7-year, beating the expectation of 85.3. The outcome ignited in a rise in the US dollar, as the EURUSD pair traded lower and the USDCHF pair jumped higher to record a new monthly high. The USDCHF pair traded as high as 0.9074 yesterday. However, it looks like that the pair is heading towards an important resistance area in the short term, which can cause a pullback in the pair.

Technically, there is a monster bearish trend line on the daily chart for the USDCHF pair, which now coincides with the 76.4% fib retracement level of the last major drop from the 0.9248 high to 0.8700 low. So, if the pair pushes a bit higher from the current levels and closer to the mentioned trend line, then the US dollar sellers might appear to contain the upside in the pair. The most important point to note from the charts is that the daily RSI is around the extreme levels, which can result in a sharp pullback in the USDCHF pair.

If at all the pair manages to clear the 76.4% fib level, then a run towards the last high of 0.9248 is possible. On the downside, initial support can be seen around the 0.9000 level, which acted as a resistance earlier and might act as a support moving ahead.

There is an important risk event lined up later during the New York session – the Fed will announce the interest rates along with the taper details. So, the US dollar might move a lot during this particular event.

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[team.ikofx]

USDJPY: More Gains Favored As It Clears An Important Resistance Zone

The US dollar surged higher yesterday after the release of the ADP employment change figures and the US GDP data. The earlier one registered one more reading above the 200K mark, and the latter one surprised with a solid reading of 4%, beating the expectation of 3% growth rate. This ignited a sharp rally in the US dollar. One of the biggest gainers of the day was the USDJPY pair, as it climbed above the 102.60 level to challenge the 103.00 level. The pair looks like retracing some of the recent gains, which can be seen as a buying opportunity.

Technically, there was a major resistance around an important confluence area of a bearish trend line on the daily chart, 100-day moving average, 200-day moving average and 38.2% fib retracement level of the last drop from the 104.11 high to 100.81 low. The pair managed to break the mentioned confluence area yesterday and closed above it. This particular break can be seen as very crucial, as it opens the door for more gains in the pair. The pair did climb yesterday close to the 103.00 level, but failed to close above the 61.8% fib level. So, a short-term pullback from the current levels cannot be denied. In that situation, the pair might fall closer to the broken resistance zone. The 102.40-20 area can now be seen as a major support area.

The RSI on the daily chart is around the extreme levels, which increases the possibility of a correction in the short term. The US initial jobless claims number and Chicago PMI data will be published later today, which might act as a catalyst for the pair.

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[team.ikofx]

What’s Holding The Upside In AUDUSD?

The Australian dollar has recently struggled a lot against the US dollar, but managed to find some bids around the 0.9280 support level. The pair did manage to bounce from the mentioned level, but failed once again to break higher around an important level. The Australian Producer Price Index (PPI) was also published earlier during the Asian session by the Australian Bureau of Statistics. The Forex market was expecting the Australian PPI to increase by 0.7% this time around, but the outcome was a disappointing one. The report mentioned that the Australian PPI fell by 0.1% in the second quarter of 2014.

Technically, there is a bearish trend line formed on the hourly chart, which held the upside in the pair earlier during the Asian session. Moreover, the same trend line also coincided with the 50% fib level of the last move lower from the 0.9354 high to 0.9279 low. So, technically it was a major hurdle for the AUDUSD pair, and it also aligned with the fundamentals. The pair is again heading back towards the 0.9280 support area. The mentioned support holds a lot of importance in the short term, as a break below might call for more losses in the pair maybe towards the 0.9220 level. So, one need to be very careful trading this pair in the short term.

Not to forget there is an important risk event lined up later during the NY session i.e. the US nonfarm payrolls and the unemployment data will be published. So, a lot of moves are expected during the upcoming sessions.

Overall, as long as the pair stays above the 0.9280 level the chance of a recovery is possible moving ahead.

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[team.ikofx]

USDJPY Might Correct Lower Before Moving Back Higher

The US dollar traded lower against most of its counterparts, including the Japanese on last Friday after the miss in the US NFP figures. The USDJPY pair after trading as high as 103.08 moved lower back towards the 102.33 level, which also coincided with the 38.2% fib retracement level of the last move higher from the 101.08 low to 103.08 high. This move can be considered as a wave 1, and it looks like the pair under wave 2, which might take it closer to the 102.80 resistance area. The mentioned level might act as a hurdle for the US dollar buyers in the short term.

If the pair fails to break higher and trades lower, then initial support can be seen around the 102.33 level. However, the most important support can be seen around the 50% fib level, which also coincides with a critical bullish trend line on the 4 hour chart. So, it is around the 102.10-00 level where wave 3 might complete and call for a new leg higher in the pair. The mentioned support level holds a lot of importance, as if the US dollar buyers fail to defend the same, then a break below could take the pair back towards the 101.60-50 support area.

On the upside, initial resistance can be seen around the 102.80 level, followed by the last high of 103.08 level. Any further gains might take the pair closer to the 103.40 resistance area, which is a pivot zone for the pair.

Overall, as long as the pair is trading above the 102.00 support area more gains are likely in the pair moving ahead.

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[team.ikofx]

AUDJPY: Break Of 95.50 To Ignite More Losses In Short Term

The Australian dollar seems to be struggling against the Japanese yen to hold the ground, as there is an important resistance around the 95.80 level, which is acting as a barrier for the pair. There were a couple of releases scheduled during the Asian session, including the AIG Performance of Services Index and Australia’s trade balance data. Both the event’s outcome was in favour of the Australian dollar, as the AIG Performance of Services Index jumped from 47.6 to 49.3, and trade balance data came better than expected with a reading of -1683M. However, the Australian dollar buyers were not encouraged by the outcome.

As mentioned, there is a critical resistance area around the 95.80 level. A contracting triangle resistance trend line on the hourly chart and the 200 moving average sits around the mentioned level, which is acting as a barrier for the pair. Moreover, the 50% fib retracement level of the last leg lower from the 96.12 high to 95.29 low is also around the same levels. So, there are more than enough reasons for the Aussie sellers to take the pair lower. The AUDJPY pair is currently trading around the triangle support trend line. There is a chance that the pair might bounce one more time to retest the 95.70-80 resistance zone, and if it fails again to break higher, then a move below the triangle support area might be on the cards.

Alternatively, if the pair surges above the 95.80 level, then there is a high probability that the pair might challenge the 96.12 high again moving ahead. The hourly RSI has just breached the 50 mark, which can be considered as a divergence sign for a move lower.

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[team.ikofx]

EURUSD: Selling Rallies Is Still A Good Idea In Short Term

The Euro suffered heavy losses yesterday post impressive economic data in the US. The US ISM non-manufacturing PMI was released yesterday, which registered a reading of 58.7, beating the expectation of 56.3. This encouraged the US dollar buyers, as the pairs like EURUSD and AUDUSD moved lower. The EURUSD pair trimmed all recent gains, and created a new low below the 1.3360 support area. The pair has broken an important support area, which means it might act as a resistance in the short term. So, selling rallies look like a good option in the short term.

There was an important bullish trend line formed on the hourly chart for the pair, which was breached by the Euro sellers yesterday. The pair also broke the previous low to trade around the 1.3358 level. The RSI is around the extreme levels, which means there is a chance of a short-term retracement, but it can only be seen as a part of a correction. If the pair moves a bit higher from the current levels and moves closer to the broken trend line, then it might face selling pressure around the 1.3390-95 levels. Only a break and close above the 100 hourly moving average can put the pair back in the bullish zone.

Alternatively, if the pair continues trading lower, then it would be interesting to see whether the Euro buyers can manage to hold the last low or not. A break below the 1.3355 level might call for a move towards the 1.3320 support area.

Overall, as long as the pair is below the 1.3400 level more losses cannot be denied moving ahead towards the 1.3300 area.

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[team.ikofx]

AUDNZD Down As Aussie Jobs Report Disappoints

The Australian dollar is trading lower across the board, as there was a major economic data released about an hour ago. The Australia’s employment report was published by the Australian Bureau of Statistics. The outcome was very disappointing, as the report mentioned that the employment change stood at -300, which is horrible compared to the +12K expected. Moreover, the unemployment rate ticked to 6.4% from 6.0%. So, overall the outcome was very disappointing, and weighed on the Australian dollar against most major currencies, including the New Zealand dollar. The AUDNZD pair traded sharply lower after the release.

There is an important bullish trend line formed on the hourly chart for the pair, which could possibly act as a support for the pair. The pair recently climbed higher, but failed to break the all-important 1.1050 resistance area. Currently, the pair has broken the 200 hourly moving average, and moving closer to the 61.8% fib retracement level of the last leg higher from the 1.0926 low to 1.1052 high. The mentioned fib level is just above the 100 hourly moving average. So, buyers might appear around the 1.0975 level, but considering the economic release it is very likely that the pair might continue trading lower and challenge the highlighted bullish trend line.

On the upside, the broken 200 moving average might act as a resistance in the short term and could encourage the Aussie sellers to take the AUDNZD pair lower. The RSI is around the extreme level, but the momentum is mostly in favour of sellers.

Overall, any major rallies can be seen as a selling opportunity until there is any disappointing news release from the New Zealand.

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[team.ikofx]

USDCAD Looks Set For A Move Towards Last High

The US dollar is trading higher against most major currencies, including the Canadian dollar. The US initial jobless claims figure, which fell below the 290K mark ignited a rally in the US dollar. However, the Canadian Ivey PMI was also published during the NY session yesterday, which came in at 54.1, beating the expectation of 53.0. So, the outcome was on the positive side of the Canadian dollar. It gained traction for some time, but the USDCAD pair found buyers around an important support area, which took the pair higher again.

There is an important bullish trend line formed on the hourly chart for the pair, which acted as a support yesterday. The pair has now breached the 100 hourly simple moving average, and trading around the 50% fib retracement level of the last drop from the 1.0985 high to 1.0931 low. So, if the pair manages to settle above the 50% fib level and the 61.8% fib level, then a move towards the last swing high of 1.0985 is very likely. The hourly RSI has breached the 50 mark, which adds value to the bullish view in the short term.

However, a failure to break the 61.8% fib cannot be denied. If it fails to break it and moves lower again, then a test of the highlighted bullish trend line might be on the cards. The pair needs to break the trend line to gain momentum for the downside.

Overall, dips can be considered as an opportunity for buying, and as long as the pair is trading above the 100 hourly moving average more upside is possible.

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[team.ikofx]

USDJPY Testing A Short Term Pivot Area

The US dollar after trading higher towards the 103.00 level against the Japanese yen moved lower back below the 102.00 support area. It looks like that the pair is currently retracing some of the recent losses and tested a major pivot around the 102.20 level. If the US dollar buyers manage to break the mentioned resistance area, then a move towards the 200 hourly moving average is likely in the short term. Let us analyse the charts and try to find out what’s the best possible scenario in the short term for the USDJPY pair.

There is a critical bearish trend line formed on the hourly chart for the pair, which acted as a resistance on several occasions. The USDJPY pair recently tested the mentioned trend line, but failed to break it. The most important point is that the same trend line also coincides with the 50% fib retracement level of the last drop from the 102.92 high to 101.51 low. So, the US dollar buyers might face a tough time around the 102.10-20 levels. Moreover, the 100 hourly moving average is also sitting around the 102.27 level at present, which means there are several hurdles for the pair on the way up.

On the other hand, if the pair fails to break the trend line, then a move back towards the 101.80 support area is likely. Any further losses might take the pair back towards the last low of 101.50. The hourly RSI is above the 50 mark, which can be seen on the positive side.

Overall, if the pair breaks higher and successfully closes above the mentioned resistance area, then one can consider entering a low-risk long position with a small stop.

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Posted By IKOFX Technical Team: Online Forex Broker