The market is starting to look top heavy following the recent surge to 99.70 and could be looking to carve out a short-term top ahead of a more significant corrective pullback to retest the previous neckline breakout at 94.60 over the coming days.
The 10-Day SMA in Usd/Jpy which currently comes in at 98.30, has been supporting the entire rally out from the 87.15 multi-year trend-lows set back in mid-January. The last time we saw a close below the 10-Day SMA was on January 27, 2008 and as such, any move back below the moving average will be taken as a bearish signal and shift in the short-term trend. As always, we recommend looking for a close below the 10-Day SMA for confirmation of a potential short-term trend shift. Inability to close below negates and leaves the constructive structure intact.
Written by Joel Kruger, Technical Currency Analyst for DailyFX.com
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