Signals for USDJPY sentiment were again bearish last week and a loss of more than 100 pips from Monday's open confirmed the strategy. This was the 3rd week of losses in row in USDJPY which has also now confirmed the Bearish Engulfing signal formed at April's top – a pattern of trading consistent with exhausted bull market momentum and start of a new bearish bias.
Going into this week the market has almost corrected 50% of the rally since March’s low (76.25 – 85.54), bounces are failing and attracting selling interest. Nnegative momentum levels have, however, failed to increase in line with the losses, which is a warning that selling interest is weakening. Against this background the forecast is bearish below 82.30 for losses through 80.87, the 50% pullback to 79.75, a deeper 62% correction or potentially 78.83, the low traded on the 18th March.
Risk to this forecast is that bearish momentum continues to slow and USDJPY is bought through 82.30, Thursday's top. This should be a bullish signal that sentiment is improving again to 82.81, Wednesday's top then the high on 20 April at 83.12.
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