USD/JPY near the midpoint of recent upward channel
2023.08.02 06:36
is edging lower today following the good move recorded since the latest BoJ meeting. The pair remains near the midpoint of the upward trending channel that has been in place since the March 2023 banking sector-induced pullback and a tad below the 2023 high, thus keeping the recent rhetoric about a likely intervention alive.
The bulls are trying to register a series of higher highs and higher lows and reestablish their control over the market but the momentum indicators are mixed at this stage. The Average Directional Movement Index (ADX) has been on an aggressive downward path since the June 30 peak. It is now preparing to drop below its 25-threshold and hence signal a range-trading market. On the other hand, the stochastic oscillator appears to support the bulls’ intentions. It has managed to bounce off its moving average (MA) and it is now heading higher towards its overbought area while building a good gap from its MA.
Should the bulls remain determined in staging another rally, they would try to push USDJPY above the October 21, 2022 downward sloping trendline and the September 7, 2022 high at 144.99. They would then have the opportunity to record a new 2023 high before they set their eyes on a bigger prize, the August 11, 1998 high at 147.71.
On the flip side, the bears are anxiously trying to avoid a return to the recent USDJPY highs. They appear willing to defend the October 21, 2022 trendline and gradually lead the pair towards the busy 139.38-139.96 area populated by the July 14, 2022 high and the 23.6% Fibonacci retracement level of the March 9, 2022 – October 21, 2022 uptrend respectively. However, they first have to overcome the 50-day simple moving average (SMA) 141.17.
To sum up, USDJPY bulls are back in control assisted by a bullish stochastic, but the battle’s outcome is yet to be decided.
