April 25, 2024

USD/JPY Technical Analysis: Impending Bearish Cross on MACD Raises Concern Among Investors

During the early hours of Tuesday in the European Session, the USD/JPY pair fluctuated between 136.30 to 40. Unfortunately, the pair failed to extend last week’s turnaround from a two-month high. Instead, it continued consolidating a three-week rise on the bearish chart.

This news has caused concern among investors and traders hoping for a more positive outcome. However, despite the setback, experts remain optimistic that the pair will eventually rebound and reach a more favorable position.

Technical Analysis of USD/JPY Pair

In addition to the lackluster moves, the impending bar cross on the Moving Average Convergence Divergence (MACD) also keeps up with the USD/JPY pair. The MACD is a renowned technical analysis indicator that identifies momentum, trend, and strength changes in an asset’s price. When the MACD crosses beyond the signal line, it is typically seen as bullish, while a cross below is bearish.

The impending bearish cross on the MACD suggests that bears feel hopeful unless the quote defies the bearish chart pattern. However, this hope among sellers is causing concern among investors and traders closely monitoring the situation.

If the pair fails to rebound, it could significantly impact the market and potentially lead to further losses. For the pair to create a bullish outlook, the yen must remain above 136.90 and cross the 137.00 round figure.

However, this may be a challenge, given the current market conditions. Moreover, the bearish chart pattern indicates that the pair may continue to decline in the short term, which could cause the yen to weaken further against the dollar.

It is worth observing that December 2022 high near 138.20 acts as a last-resort defense for the USD/JPY pair’s bears. If the pair manages to break above this level, it could propel the prices to the 140.00 psychological price level, which would be a significant milestone for the pair.

However, breaking through this level may take much work, given the current market conditions. In the short term, the 50 SMA and the wedge’s bottom line show the 135.00 level as a key support for the pair. If the pair falls below this level, it could trigger a bearish trend and further decline.

If the pair’s bears keep the price below the key support level of 135.00, the pair may continue its downward run and target the 133 level. This dip could lead to a monthly low of 128.00. The USD/JPY pair’s bull is running out of steam after the biggest slump in four months.

The bears are still far from entry unless the quote consolidates above 135.00. Therefore, it is essential for traders to monitor the market closely and to stay informed about any changes that may occur. It is also important to approach trading cautiously and avoid making hasty decisions that could result in significant losses.

While the pair’s price action may seem subdued, investors and traders will monitor any potential market-moving events that may impact the pair’s performance.

Conclusion

It is worth noting that the market can be unpredictable, and unexpected changes can occur at any time. Therefore, traders should maintain a long-term perspective and not get caught up in short-term fluctuations in the market. However, by staying informed and monitoring the market closely, traders can make informed decisions and navigate challenging market conditions.

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