USDJPY rallies ahead of key market events
USDJPY is recording its third consecutive green candle today and it is now trying to overcome the busy 146.22-147.71 area. It has been an aggressive rally from the December 28, 2023 low of 140.24, cancelling out a good part of the November-December 2023 downleg. The market is preparing for some key events over the next few trading days with most momentum indicators appearing supportive of the current upleg.
The Average Directional Movement Index (ADX) is edging higher, above its 25-threshold and signaling the presence of a modest bullish trend in the market. Similarly, the RSI has jumped above its 50-midpoint and is now hovering around a new 3-month high. More importantly, the stochastic oscillator has entered its overbought territory, a tad above its moving average. It can stay there for a while before signaling the end of the current bullish move.
Should the bulls remain hungry, they could try to decisively overcome the busy 146.22-147.71 range, which is populated by the 78.6% Fibonacci retracement of the October 21, 2022 - January 16, 2023 downtrend, the August 11, 1998 high and the 50- and 100-day simple moving averages (SMAs). Higher, the bulls could stage a move towards the October 3, 2023 high at 150.15 with the ultimate target possibly being the 151.94 level.
On the flip side, the bears could try to defend the 146.22-147.71 area and then gradually push USDJPY towards the September 7, 2022 high of 144.99. Even lower, the support set by the 200-day SMA at 143.80 could prove stronger than currently anticipated, but if successfully broken, the bears could then have a go at 61.8% Fibonacci retracement level at 142.49.
To sum up, the upward move in USDJPY continues, gaining the support of most momentum indicators but the bears are hoping that the busy 146.22-147.71 range could put a temporary stop on the current rally.
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