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Fall from 109.85 Bounces off 107.00 on USD/JPY

June 12, 2020 at 5:08 by Dorin Rosu

The US dollar versus the Japanese yen currency pair recent fall seems to be limited by the 107.00 psychological level. Are the bears taking a pause, or it is the bulls trying a comeback?

Long-term perspective

The appreciation from the 105.98 low brought the price above the key 107.00 level and, after a consolidation that confirmed the level as support, the market printed the strong rally that etched the 109.85 high, piercing the major 109.08 resistance and also drawing the ascending trendline in the process.

However, what followed was far from an outcome that would show that the bulls are in control, the strong depreciation not only returning the price under the soon-to-be-conquered 109.08 level but also invalidating the ascending trend that started from 105.98, stopping — at least for the time being — at 106.57.

If the bulls succeed in confirming the 107.00 level as support, with a daily close above the level, then they may have a shot for the double resistance defined by the ascending trendline and the intermediary level of 108.05.

Until there, the price would be in neutral territory with only a slight lean towards the bullish side. In other words, once at the possible double resistance, the bears could step in and send the price back to 107.00. On the other hand, if the bulls do manage to validate the double support, then they open the door to 109.08.

On the flip side, if the price only consolidates in the area of 107.00, without noting an actual bullish motive, then the market participants could consider that this has been a rest of the decline that commenced at 107.85 and yield another slope towards the 106.12 temporary level.

Short-term perspective

The fall from the 109.85 high imprinted the low of 106.57, from where a rally took place. Even if the rally equals to a pause of the descending movement, as long as the price is contained within the 107.34 and 106.77 boundaries, both bulls and bears could turn out to be the ones that can drive the market further.

Noteworthy is that the 107.08 low might serve as resistance. So, if the price manages to pierce and confirm the intermediary level of 107.34 as support, then the bulls could send the price to the important 108.02 level.

But if the 106.77 level (or the 107.08 low) is validated as resistance and the 106.57 low taken out, then the bulls could further push the price towards the major support of 106.02.

Levels to keep an eye on:

D1: 107.00 108.05 109.08 106.12
H4: 107.34 106.77 107.34 108.02 106.77 106.02

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