USD/JPY is trading in the red on the H4 chart but the current drop could be a temporary one. Technically, the pair has shown some oversold signs but we have to wait for confirmation before going long again.
The pair needs a bullish spark to be able to turn to the upside. USDX's and JP225 growth could force USD/JPY to give birth to a swing higher. Today, the US is to release the ISM Manufacturing PMI and the ISM Manufacturing Prices, and the Wards Total Vehicle Sales data. Better than expected figures should boost the rate, while poor numbers could send it lower.
USD/JPY End Of Bearish Movement?
USD/JPY failed once again to reach and retest the Falling Wedge's downside line signaling an oversold situation. Also, Stochastic indicates a bullish divergence on the H4 chart. Still, is premature to open a long position as long the price is traded under the Pivot Point (103.37) level.
The warning line (wl1) and the downside line represent strong support levels, a failure to reach these downside obstacles or a false breakdown with great separation could indicate a bullish reversal.
The selling pressure is high, a valid breakdown through the downside line, warning line (wl1), and below the S2 (102.43) indicates a deeper drop.
Forecast!
Selling at the current level is risky, so you should wait for a fresh trading opportunity! A false breakdown with huge separation below the downside line and through the first warning line (wl1), or a bullish engulfing, suggests buying with a first upside target at the downtrend line.
Also, a bullish closure above the PP (103.36) indicates further growth. On the other hand, dropping and stabilizing under the immediate support levels announces more declines.
