- USD/JPY buyers recaptured the 137.00 figure and set to storm 138.87, ahead of a five-week high.
- The 4-hour chart suggests that USD/JPY could drop towards 135.58, before continuing its uptrend.
The USD/JPY advanced strongly during the day, above its opening price, after reaching a daily high at 13.7.65, but late in the day, with an hour to go before the Wall Street close, the currency gave back some of its gains in middle of a risk session on Monday. At the time of writing, USD/JPY is trading at 137.50, up 0.47%.
USD/JPY Price Analysis: Technical Outlook
USD/JPY has a bullish bias, turning from neutral after the pair fell towards 130.39 on August 2nd. However, that has been the lowest level the pair has reached for three months, and when it broke a descending trend line on August 17, it went from having a neutral bias to a bullish bias.
That being said, USD/JPY is trading near the daily highs of Jul 27 at 137.65, which, once broken, will see the pair rally towards the Jul 21 high of 138.87, followed by the year’s high of 139.38. .
On the four hour time frame, USD/JPY is facing a sell off resistance at the R1 daily pivot, which is also the confluence of the Jul 27 daily high at 137.46. Do not forget that the Relative Strength Index (RSI) is entering overbought conditions. Therefore, USD/JPY could post a leg lower before continuing higher.
If this scenario plays out, the first support for the USD/JPY will be the 20 EMA at 136.25, followed by the confluence of the 200 EMA and the daily high of August 7 at 135.58.
Technical levels
Source: Fx Street
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