USD/JPY breaks two-week long channel down
USD/JPY breaks two-week long channel down
For the first time in many weeks, reports about another ballistic missile launch made by North Korea did not led to appreciation of the Yen. The news from Asia most probably was beat by a series of positive news coming from the United States. From technical point of view, strengthening of the buck led to breakout through strong resistance formed by the upper boundary of a descending channel together with the 55- and 100-hour SMAs.
Although certain signs point out on formation of a new ascending channel, this view might be premature, as further path to the north is obstructed by resistance zone surrounding the 38.2% Fibonacci retracement level at 111.65 as well the weekly PP at 111.78 that is backed up by the 200-hour SMA. In other words, today the pair is likely to plunge back to 111.20.
For the first time in many weeks, reports about another ballistic missile launch made by North Korea did not led to appreciation of the Yen. The news from Asia most probably was beat by a series of positive news coming from the United States. From technical point of view, strengthening of the buck led to breakout through strong resistance formed by the upper boundary of a descending channel together with the 55- and 100-hour SMAs.
Although certain signs point out on formation of a new ascending channel, this view might be premature, as further path to the north is obstructed by resistance zone surrounding the 38.2% Fibonacci retracement level at 111.65 as well the weekly PP at 111.78 that is backed up by the 200-hour SMA. In other words, today the pair is likely to plunge back to 111.20.
Comment:
USD/JPY tests strong resistance at 112.70
Unfortunately, neither existence of a rising wedge formation, nor the weekly R1 or the 50% Fibonacci retracement level stopped the rate from breaking to the top. However, this does not automatically mean dissolution of the pattern, as it still stay in force by making readjustment of the boundaries.
Regardless of existence of the figure, in order to continue moving upwards, the pair will need to cross strong resistance zone located between the 112.62 and 12.70 marks. In addition to that, this barrier is strengthened by the 55-day SMA that lies at 112.75 as well as the 50% Fibonacci retracement level located at 113.00. In support of this assumption, 55% of pending orders in 100 pip range and 59% in 50 pip ranges are set to sell.
Unfortunately, neither existence of a rising wedge formation, nor the weekly R1 or the 50% Fibonacci retracement level stopped the rate from breaking to the top. However, this does not automatically mean dissolution of the pattern, as it still stay in force by making readjustment of the boundaries.
Regardless of existence of the figure, in order to continue moving upwards, the pair will need to cross strong resistance zone located between the 112.62 and 12.70 marks. In addition to that, this barrier is strengthened by the 55-day SMA that lies at 112.75 as well as the 50% Fibonacci retracement level located at 113.00. In support of this assumption, 55% of pending orders in 100 pip range and 59% in 50 pip ranges are set to sell.
Even though there were attempts to push the pair back to the 55- and 100-hour SMAs, anticipation of the upcoming US GDP data release and the event itself inched the buck higher. Without this fundamental background the pair would unlikely to bypass the 38.2% Fibonacci retracement level at 111.65 and the monthly S1 at 112.05.
However, the further surge seems unlikely, as yesterday’s sharp advance led to transformation of new junior ascending channel into the rising wedge formation. In support of this assumption, there is an alleged resistance area between the 112.30 and 112.35 marks that matches with the breaking point of the pattern. In case this assumption is incorrect, a combination of the weekly R1 and the 50% Fibonacci retracement level near 112.45 should temporarily halt the buck from soaring higher.