The USD/JPY currency pair, on the D1 time-frame, was in an upward path until 24th of April when a higher top was recorded at 112.400. Supply pressure overwhelmed the demand in the market as sellers started to find the price attractive, causing the upward momentum to be disrupted.
A closer look revealed that the Momentum Oscillator displayed negative divergence between point a and b compared to the price at 112.095 and 112.400. This could have alerted technical traders to a possible reversal in the making.
After the high at 112.400, the price broke through the 15 and 34 Simple Moving Averages with the Momentum Oscillator breaking the zero baseline as well as the crossing of the 15 and 34 Simple Moving Averages, called a Death Cross. This further strengthened the possibility of a technical reversal in progress.
A possible critical support level formed when a lower bottom was recorded at 109.020 on the 13th of May. Buyers tried to push the market higher but supply overcome demand with a lower top forming at 110.679 on the 21st of May.
If the USD/JPY breaks through the critical support level at 109.020, then three possible price targets may be projected from there. Attaching the Fibonacci tool to the lower bottom at 109.020 and dragging it to the top of the pullback at 110.679, the following targets may be calculated. The first target can be anticipated at 107.995 (161 %). The second price target can be predicted at 106.337 (261.8%) and the third and final target may be expected at 103.653 (423.6%).
If the top at 110.679 is broken, the possible scenario is invalidated and will need to be re-evaluated.
As long as sellers maintain a negative sentiment and supply overcomes demand, the outlook for the USD/JPY currency pair on the D1 time-frame will remain bearish.
A closer look revealed that the Momentum Oscillator displayed negative divergence between point a and b compared to the price at 112.095 and 112.400. This could have alerted technical traders to a possible reversal in the making.
After the high at 112.400, the price broke through the 15 and 34 Simple Moving Averages with the Momentum Oscillator breaking the zero baseline as well as the crossing of the 15 and 34 Simple Moving Averages, called a Death Cross. This further strengthened the possibility of a technical reversal in progress.
A possible critical support level formed when a lower bottom was recorded at 109.020 on the 13th of May. Buyers tried to push the market higher but supply overcome demand with a lower top forming at 110.679 on the 21st of May.
If the USD/JPY breaks through the critical support level at 109.020, then three possible price targets may be projected from there. Attaching the Fibonacci tool to the lower bottom at 109.020 and dragging it to the top of the pullback at 110.679, the following targets may be calculated. The first target can be anticipated at 107.995 (161 %). The second price target can be predicted at 106.337 (261.8%) and the third and final target may be expected at 103.653 (423.6%).
If the top at 110.679 is broken, the possible scenario is invalidated and will need to be re-evaluated.
As long as sellers maintain a negative sentiment and supply overcomes demand, the outlook for the USD/JPY currency pair on the D1 time-frame will remain bearish.
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