- USDJPY is barely holding onto upside momentum
- Stiff support propping up the bulls but neutral shift may be unavoidable
USDJPY is slowly crawling back up towards the February 13 peak of 150.87 after a mild pullback. But despite the tight range of the past two weeks and a strong immediate support zone, the bullish forces may not yet be powerful enough to drive the price to fresh highs.
The stochastics have only just turned positive after today’s rebound in the 4-hour chart, while the MACD is flat and is being capped by its red signal line.
An attempt to break above the 150.87 peak is plausible in the short term. However, the real challenge is overcoming the 151.00 level. Clearing this hurdle would put the pair on track to retest the November 2023 top of 151.89 and aim for the 152.00 handle.
To the downside, there is plenty of support that makes it difficult for the bears to pose a significant imminent threat. The 20-day simple moving average (SMA) is the first line of defence at 150.45, followed by the 50-day SMA at 150.26. Slightly lower lies the Kijun-sen line at 150.21, which has flatlined just above the top of the Ichimoku cloud. Should these walls collapse, there’s likely to be further support at the psychologically important 150.00 level.
However, by this point, the near-term bias would have switched to neutral as the price would have already entered the Ichimoku cloud. So, the focus would then quickly turn to the 78.6% Fibonacci retracement of the November-December downleg at 149.40, after which there would be a high risk of slipping below the cloud.
Summing up, USDJPY urgently needs to make a significant push towards the 151.00 area, otherwise it risks being stuck in a consolidation mode. Yet, in the bigger picture, the bullish structure should be safe as long as the price avoids a drop below the 78.6% Fibonacci.
