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On Tuesday, USD rose to 78.93 - its strongest level since Sept. 17 against JPY as upbeat U.S. retail sales data and speculation of further monetary easing by the BoJ weigh on the Yen.
The pair is currently quoting at 78.88, near the 50% Fibonacci Retracement Level of 80.62 - 77.12 move and above the 100-day SMA.
Falling Wedge formation, generally a bullish pattern, is visible on daily charts signaling that the pair is likely to break upwards through the wedge and move into an uptrend.
Further, this bullish bias seems to have confirmed as the pair has managed to breakout through the upper resistance line.
Immediate resistance on the upside is seen near 79.20 – 79.25 zone – 61.8% retracement level followed by a strong resistance near 79.60 – 79.70 zone.
Should the pair manage to sustain above 79.60 – 79.70 resistance zone, the bullish momentum is likely to continue in the near-term towards 80.50 level.
On the downside, the 100-day SMA, currently at 78.69, is likely to act as immediate support for the currency pair.
Should the pair weaken below the 100-day SMA support, 38.2% retracement level near 78.40 is likely to act as short-term bottom for the currency pair.
Investors should look for opportunities to buy the currency pair on every dip towards 78.40 as the pair now seems to be testing higher levels in the near-term.
Haresh Menghani
Market Analyst
Admiral Markets
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