- USD/JPY breaks a trend line from five months ago, aiming to reach the 200 day EMA around 134.99.
- Oscillators in bearish territory consolidate the downtrend, but the overbought RSI could stop traders shorting USD/JPY.
- USD/JPY: After recapturing the 200 day EMA, a drop towards 131.70 is forecast.
The USD/JPY Plunges below 136.00, extending its losses towards the 135.20 zone, spurred by risk aversion momentum and weakening manufacturing activity in the United States (US), posing a risk of recession . Therefore, USD/JPY sellers stepped in, below Wednesday’s low of 137.64, sending the pair down more than 250 points. At the time of writing, USD/JPY is trading at 135.34.
USD/JPY Price Analysis: Technical Perspective
USD/JPY turned from neutral to bearish once it broke above the confluence of the 20 and 100 day EMAs around 140.46/50. Notably, the 9 Period Rate of Change (ROC) is gaining momentum, which means that the sellers are in control. However, the Relative Strength Index (RSI) entered an oversold condition, which means that USD/JPY could consolidate around the 200-day EMA at 134.99 before continuing lower.
Furthermore, USD/JPY fell below a 5-month rising trend line from the June lows, compounding the decline. In conclusion, USD/JPY has a short-term bearish bias.
Therefore, the first support for USD/JPY would be the 200 day EMA at 134.99. A break below will expose crucial psychological levels such as the 134.00 and 133.00 figures, followed by the Aug 11 low at 131.73.
Key USD/JPY Technical Levels
Source: Fx Street
I am a writer for World Stock Market. I have been working in finance for over 7-8 years, and I have experience with a variety of financial instruments. My work has taken me to Japan, China, Europe, and the United States. I speak Japanese and Chinese fluently.
