Red lines- bearish divergence
Blue line- major resistance trend line
In our previous analysis on USDJPY we noted that the creation of a short-term top is very possible. In our last post we mentioned that our expectations for price were to see new short-term higher highs and then reverse lower. Price made a higher high at 135.60 as expected and then turned lower. Despite the higher high in price, the RSI continued to provide bearish divergence signals. These are not reversal signals, but signals implying that the up trend is weakening. The chances for a bigger pull back have increased. Support is found at 133.90. Failure to stay above this level will be an important sign of weakness confirming that a short-term top is in.
