Home Forex Bears are nearing key support at 138.40

Bears are nearing key support at 138.40

by SuperiorInvest
  • USD/JPY accepts bids to retake weekly lows, prints 3-day downtrend.
  • An uptrend line from August is tempting sellers, but RSI conditions challenge another decline at 138.40.
  • 100-DMA, recent swing recovery, October low is key to buyer entry.

USD/JPY it stands on slippery ground as it recovers its weekly low near 138.80 during Thursday. Meanwhile, the Japanese yen (JPY) is down for a third straight day after reversing from the 38.2% Fibonacci retracement level from May to October.

Apart from the reversal from the important Fibonacci barrier, a clear break of the 100-DMA to the downside and bearish MACD signals in favor of the USD/JPY bears.

However, the uptrend line from early August, around 138.40 as of press time, could limit further downside for the yen amid a near oversold RSI line (14).

Even if the quote breaks the 138.40 support, the six-month-old ascending support line near 136.90 at the latest will act as another downside filter to challenge sellers in USD/JPY.

It is worth noting that the 61.8% Fibonacci retracement level near 136.10, also known as the golden section, will act as the last defense for the USD/JPY bulls.

Conversely, the 100-DMA and the aforementioned 38.2% Fibonacci retracement levels, near 141.15 and 142.20 respectively, could limit the pair’s short-term upside.

However, the horizontal area covering multiple levels marked since early September, near 145.10, will be a tough nut to crack for USD/JPY bulls.

USD/JPY: Daily chart

Trend: Further decline is expected

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