USDJPY stabilized on Tuesday after reaching 2-1/2 month lows on Monday at 118.69.
Sustained trading below the 118.05 October low would expose the 116.11 August low for a retest. The technical indicators are giving bearish signals. The tenkan and kijun lines are negatively aligned and are both pointing south, meaning current downside momentum is very negative in the near term.
The level of 119.27 is important – it is the 76.4% Fibonacci retracement of the 118.05-123.74 (October/November) rise. A close below this would have bearish implications and increase the likelihood of a 118.05 break. RSI is in bearish territory below 50 and falling, which is also highlighting the downside bias. Also the market is below the Ichimoku cloud and prices would need to break above this in order to shift the bearish bias on the daily chart. In the bigger picture, (on the weekly chart) USDJPY is neutral and hovering around the key 120.00 level.
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