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Technical Update - JPY pairs hit by massive sell-off. Correction or trend reversal? USDJPY, EURJPY, AUDJPY and GBPJPY
Kim Cramer Larsson
Technical Analyst, Saxo Bank
USDJPY sold off down to test the lower rising trendline and the support at around 157.71, dipping to touch the 0.618 retracement at 157.37 before bouncing strongly
RSI divergence did warn us about trend exhaustion and a looming correction.
Question is, will it continue or will USDJPY resume uptrend?
If USDJPY breaks below yesterdays low at 157.40 expect further selling down to the 0.786 retracement at 156.13, possibly all the way down to 154.54 i.e., the June low
USDJPY can still resume uptrend but it requires that the pair is taking out peak at 151.95. It might take some time before that scenario is playing out but a bounce to the 0.618 retracement of Thursday sell-off at 160.13 could be seen.
EURJPY went yesterday straight through the support at 173.50 and down to the 0.50 retracement at 171.48 before bouncing.
A correction in FX usually moves to at least the 0.618 retracement meaning this correction could push lower to 170.54 which is also around a strong support level.
However, if EURJPY is closing back above 173.50 the bullish trend could resume. A bullish trend will be confirmed if EURJPY is closing above 175.45
AUDJPY took out support at around 107.90 to the 0.382 retracement at 106.81 before bouncing. Currently testing the now resistance at 107.90, if AUDJPY is closing above the pair could resume bullish trend with first push being to the 0.618 retracement (red Fibo levels) at 108.84.
If breaking below this morning’s low at 106.75 AUDJPY is likely to sell-off further down to the 0.618 retracement at 105.20
RSI is still showing positive sentiment and more importantly not showing divergence which is indicating that AUDJPY is likely to move higher after the correction.
GBPJPY sold off heavily down to the 0.382 retracement at 203.97 before bouncing
This morning sellers tried once more but GBPJPY is currently well back above the 204.98 level.
RSI is still showing positive sentiment and more importantly not showing divergence which is indicating that GBPJPY is likely resume bullish trend and move higher after the correction.
If that scenario is playing out there is room up to strong resistance at around 214 Latest Market Insights
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