The USDJPY pair has begun the week with some positivity, but the bulls are facing a challenging battle to gain control. Despite the reversal higher in both the stochastics and RSI indicators, the momentum appears to be lacking strength. The 20-period SMA is acting as a major resistance level, limiting the price’s upward movement. Additionally, the Tenkan-sen line of the Ichimoku cloud and the Kijun-sen line are posing further obstacles for the bulls.
In order for the recent rebound from near three-month lows to continue, the price must surpass several key resistance levels. These include the 155.00 region, the 50-period SMA at 155.40, and ultimately re-entering the Ichimoku cloud. Failure to breach these levels could result in a reversal back below the 20-period SMA, potentially leading to a retest of the July 25 low at 151.93.
A break below the July 25 low would strengthen the bearish outlook for USDJPY in the short term. Moreover, slipping below the 200-day SMA at 151.62 would signal a bearish turn in the medium-term perspective. While there is still a possibility for the current rebound to gain traction, the presence of multiple obstacles ahead suggests a challenging road for the bulls.
The USDJPY pair is struggling to overcome crucial resistance levels, with the 20-period SMA acting as a significant barrier. The positive momentum observed in the near term may not be sustainable, and a failure to surpass key resistance levels could result in a reversal to lower levels. Traders should closely monitor the price action around the mentioned levels to gauge the future direction of USDJPY.
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