Despite trading firmly above 102.00, USD/JPY is having trouble breaking above 102.5. The latest venture was stopped short during European midday trading hours as price reached strong resistance in the form of intersection between rising trendline from May 14 and descending trendline from the previous 3 forays above 102.5. The fact that bulls failed in 3 occasions with lower highs is disconcerting, hinting that bullish pressure is weakening. Stochastic agrees, with Stoch crossing signal line from the top, suggesting that a bear cycle may be in the cards that would open up 102 or perhaps lower if the bear cycle continues.
Fundamentally, with USD driving most of this and previous week’s gain, it is hard to imagine USD unraveling spectacularly to allow USD/JPY bears the push needed. Nonetheless, with global economy continue to look weak, the turnaround may catch all of us by surprise.
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