- USDJPY caught in a battle to overcome 20-period SMA
- Near-term momentum is positive but weak
- Bulls face an uphill struggle to regain control
USDJPY has started the week on a somewhat positive note but it’s proving difficult for the bulls to secure the upper hand as a tough battle rages around the 20-period simple moving average (SMA) in the 4-hour chart.
Both the stochastics and RSI have reversed higher, but the positive momentum does not appear to be strong enough to last through the day let alone the next few days.
The price has only just managed to climb above the 20-period SMA but is being capped by the Tenkan-sen line of the Ichimoku cloud. The Kijun-sen line is also closing in on the price slightly above the 154.00 level. If the rebound from last week’s near three-month lows is to have any legs, the price needs to clear these hurdles, as well as the 155.00 region, and aim for the 50-period SMA at 155.40 before trying to re-enter the Ichimoku cloud.
However, if the upside momentum loses steam and the price dips back below the 20-period SMA, the pair could revisit the July 25 low of 151.93. A breach of this low would reinforce the bearish short-term picture. But for the medium-term outlook to also turn bearish, USDJPY would need to slip below its 200-day SMA too not far lower at 151.62.
In brief, there is still hope for the latest rebound to get onto a more solid footing but there are numerous obstacles ahead that could stop the bulls in their tracks.
