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Technical Update - USDJPY again testing key resistance. EURJPY & GBPJPY likely correction before new bullish move
Kim Cramer Larsson
Technical Analyst, Saxo Bank
Summary: USDJPY testing key strong resistance at 142.25. A break above will signal higher levels
EURJPY and GBPJPY rallied higher. A minor correction could be seen before next bullish move
USDJPY yesterday USDJPY was at first attempt rejected at the strong resistance at around 142.25 but could have another go shortly.
There is RSI divergence meaning if USDJPY is once again rejected at 142.25 we could see a correction down to around 140.
USDJPY is trading in a rising Wedge like pattern and if the pair is breaking below its rising trendline support at around 138.80-138.40 is likely to be tested. A close below 138.40 could lead to further selling down to lower (dashed) rising trendline and the 55 and 200 daily Moving Average.
A close above 142.25 is likely to cancel the RSI divergence indicating higher USDJPY.Weekly chart: The 142.25 resistance is within few cents from the 0.618 retracement at 142.41. A close above next key level is the 0.786 retracement t around 146.60 but USDJPY will pave the road to higher levels.
EURJPY reached 1.618 projection of the May correction and is closing in on the Triangle pattern break out target at around 156 (indicated by the vertical arrows)
However, with the positive RSI and no divergence higher levels could be seen. A move to 2.00 projection at around 157 is not unlikely. Some resistance at around 156.80.
To reverse the bullish trend a close below 146.10 is needed.
GBPJPY (weekly chart) has reached the 1.618 projection at around 182.48 but could very well move higher.
RSI is positive with no divergence suggesting a move to the 188.90 levels could be seen. Expect a correction on the way up, however.
188.90 is a fairly strong resistance level. It was the correction peak prior to the massive sell-off back in 2016 (monthly chart)
The current uptrend is so steep it is breaking above its upper trendline in the longer term rising channel pattern.
There is no RSI divergence on weekly and monthly indicating higher GBPJPY medium- to longer-term
Short-term a correction down to the lower trendline in the rising channel pattern could be seen. Possibly touching 178 before uptrend resumes. There is risk down to the 0.382 retracement at 176.67, however.
Keep an eye on Daily RSI which is likely to bounce off from its rising trendline.
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