The USD/JPY pair has been on a bullish run for the past three days, but it seems the bulls have taken a breather as the pair drops to 134.70 and is currently printing mild losses. This is the first time in four days that the Yen pair is experiencing a pullback and the overbought RSI (14) conditions also favor this move. However, the immediate downside is restricted by the convergence of the previous resistance line from January and a three-week-old ascending trend line.
The USD/JPY bears will have to break the 134.00 key support in order to make the most out of this pullback. If they manage to do this, there is a possibility of the pair dropping to the 200-SMA level around 131.00. The six-week-long horizontal support near 132.90 may act as a buffer during this anticipated fall. On the other hand, the bulls will have to break the multi-day-old resistance line from the last December, close to 135.20, in order to keep the reins. If they manage to do this, the late 2022 peak surrounding 138.20 and the 140.00 psychological magnet may gain the market’s attention.
Looking at the four-hour chart, the pair is currently trading below the resistance line from late December 2022 and the overbought RSI (14) conditions favor the pullback. The immediate downside is restricted by the convergence of the previous resistance line from January and a three-week-old ascending trend line. Thus, it can be said that the downside is likely to be limited in the near-term.
Overall, the USD/JPY pair has been on a bullish run for the past three days, but the current pullback indicates that the bulls have taken a breather. The overbought RSI (14) conditions also favor the pullback. However, the downside is restricted by the convergence of the previous resistance line from January and a three-week-old ascending trend line. The four-hour chart also suggests that the downside is likely to be limited in the near-term. Thus, it can be said that the USD/JPY pair is likely to witness a limited downside in the near-term.
In conclusion, the USD/JPY pair has been on a bullish run for the past three days, but the current pullback indicates that the bulls have taken a breather. The overbought RSI (14) conditions also favor the pullback. However, the downside is restricted by the convergence of the previous resistance line from January and a three-week-old ascending trend line. The four-hour chart also suggests that the downside is likely to be limited in the near-term. Thus, it can be said that the USD/JPY pair is likely to witness a limited downside in the near-term, although the bulls need to break the multi-day-old resistance line from the last December, close to 135.20, in order to keep the reins. If they manage to do this, the late 2022 peak surrounding 138.20 and the 140.00 psychological magnet may gain the market’s attention.
