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Japanese yen depreciation pauses as clouds linger

USD/JPY has steadied since reclaiming higher ground; A break outside the Ichimoku Cloud could be telling and if impediments are cleared, will USD/JPY find direction?

Source: Bloomberg

USD/JPY ichimoku cloud

The Japanese yen has continued to depreciate against the US dollar since the mid-January low of 127.22 and might be setting up for a bullish trend.

In late November the price moved below the Ichimoku Kinko Hyo, which is often referred to as the Ichimoku Cloud, and confirmed the end of the preceding bullish run.

That initial move also went below the Senkou Span A (Leading Span A) and the Senkou Span B (Leading Span B) to indicate that bearish momentum could unfold, which did happen in this instance.

It should be noted though that past performance is not indicative of future results.

The current price is in the cloud and may suggest that a clear trend is not yet apparent. If it moves above the cloud, it might indicate a potential bullish trend may evolve.

This could be supported by the nine-day simple moving average (SMA) already having crossed above the 26-day SMA. A possible hindrance to the bullish case is that the lagging line is yet to enter the cloud.

The price is struggling to overcome the previous peaks of 134.50 and 134.77. A clean break on either side of here might see momentum unfold in that direction.

On the topside, resistance could be at the breakpoints and prior highs of 137.67, 138.18, 139.90, 142.25 and 143.53.

On the downside, support might lie at the recent lows of 129.81, 128.09 and 127.22 ahead of the April and May lows from last year at 126.33 and 126.36.

Source: TradingView

USD/JPY technical analysis

Bullish momentum might be building in USD/JPY (大口), although some hurdles lay ahead.

The price has climbed above the 10-, 21-, 34-, 55- and 260-day simple moving average (SMA) supporting potential bullishness, but remains below to 100- and 200-day SMAs which may provide headwinds for now.

The 21-day SMA is close to crossing above the 55-day SMA, as is the 10-day over the 260-day SMA. If this occurs, it will form a Golden Cross which is a potential bullish omen.

The gradients on all SMAs are positive, with the exception of the 100-day SMA. A positive gradient may hint toward bullish momentum.

Source: TradingView

This information has been prepared by DailyFX, the partner site of IG offering leading forex news and analysis. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.


This information has been prepared by IG, a trading name of IG Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.

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