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FxWirePro: USD/JPY edges lower from 6-month highs at 113.13, doji candle shows bullish exhaustion

  • USD/JPY edges lower from 6-month highs at 113.13 hit on Wednesday's trade.
     
  • US Housing Starts tumbled 12.3% in June (missing expectations of a 2.2% slide) while Building Permits declined 2.2% (vs +6.0% of market consensus). 
     
  • The data came in significantly below expectations weighing on the US dollar across the board. 
     
  • Upside finds stiff resistance at 61.8% Fib retracement of 118.662 to 104.629 fall at 113.30 and 200W SMA at 113.24.
     
  • The pair is trading 0.08% lower on the day at 112.74, crack below strong support at 112.62 (4H 21-EMA) to see a bearish continuation underway.
     
  • Scope then for test of 23.6% Fib retracement of 108.112 to 113.137 rally at 111.95.
     
  • The technical indicators on intraday charts are showing early signs of a bearish reversal.
     
  • We see bearish divergence on RSI and Stochs on the 4H charts. Also, doji formation on Wednesday's candle shows bullish exhaustion.

Support levels - 112.62 (converged 5-DMA & 4H 21-EMA), 112.20 (July 16 low), 111.95 (23.6% Fib)

Resistance levels - 113, 113.30 (61.8% Fib retracement of 118.662 to 104.629 fall), 113.34 (200W SMA)

Recommendation: Stay short on break below 112.60, SL: 113, TP: 112.20/ 111.95

FxWirePro Currency Strength Index: FxWirePro's Hourly USD Spot Index was at -17.2161 (Neutral), while Hourly JPY Spot Index was at -1.3452 (Neutral) at 0445 GMT. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex
 

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