It took a little while, but USD/JPY is moving towards 100.0 again after breaking the 99.50 ceiling. This move was sparked by the strong risk appetite during European hours which saw Dax gaining 0.47%, FTSE by 0.66% and Stoxx by 0.51%. This shows that USD/JPY is highly sensitive to risk appetite right now, as price is moving higher when other USD based pairs such as EUR/USD and AUD/USD are trading flat. This observation is also applicable during Asian hours, where Asian stocks were trading flat with Nikkei gaining 0.23% while Hang Seng clocked in +0.12%.
From a technical basis, the breakout from the ascending triangle opens up 100.0 again. However with Stoch readings entering overbought region currently, doubts will remain whether price will be able to break the 100.0 on current move. Even if price manage to break 100.0, the 100.0 – 100.5 consolidation zone of 10-11th July will provide further overhead resistance against strong bullish move. Hence, a more likely scenario will see prices moving lower to back potentially to 99.50 before a further extension of current breakout can be made.
From a weekly perspective, price is pushing higher after last week’s decline failed to invalidate the 3 white soldiers bullish reversal pattern. As such, the rally from 94.0 remains intact, while the decline from May high being impaired significantly, which allow price for a longer recovery towards Channel Bottom once more. Stochastic readings is currently flat, which keeps options open for both side. Technically, current stoch readings suggest that the bearish cycle from May high is still in play, as the recent trough that was formed when price rebounded from 94.0 wasn’t formed from the Oversold region. As such, do not simply assume that price will be pushing higher from here until further confirmation has been sought.
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