Bearish forecast for USD/JPY. At the moment price is still struggling to make it up its mind which direction to go, at least in the short term, longer term from a technical perspective it is still to the downside.
Price has been rejected 3 times at the 61.8% Fibonacci retracement level measured from 114.74 to 104.64, the weekly bearish engulfing candle from May 21, 2018 has held despite last weeks second attempt of breaking above it.
One reason for the resiliency of USD/JPY lately, I believe, is the fact that the 100 & 200SMA already made a bearish cross over last August, however, since then the 200SMA has still continued an upwards travelling trajectory and the 100SMA is also behaving in the same manner, thus, price is trapped in some final bullish momentum, but not enough to truly make significant higher highs.
Also, if you look at the RSI, it has formed a double top and has also been unable to reach past the indicated resistance at 58.60, further evidence of more downside momentum building up.
Although all looks set to go lower, there is still plenty of volatility and noise in this pair before it does so. Therefore, the safest entry would be a close the 108.10 level, which is the low of the hammer formed at the end of May.
Trade short (RvR ratio 2:1) Entry: Close below 108.10 S/L: 111.55 T/P 1: 104.64 T/P 2: 101.20 As always, scale out your profits and adjust stop/loss to suit your personal risk management profile.
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