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by Charalambos Pissouros

USD/JPY Tumbles Below an Upside Support Line

USD/JPY has been in a free-fall mode since Friday, while today, it dipped below the upside support line drawn from the low of May 6th. Although the tumble appears very steep, with no signs that this could be altered soon, we would consider the near-term outlook to be negative for now.

The rate now looks to be headed towards the 107.10 territory, which is marked as a support by the low of May 29th. If the bears are strong enough to overcome that hurdle, then we may see them targeting the low of May 13th, at around 106.75. Another dip, below 106.75 may carry larger bearish implications, perhaps paving the way towards the 106.20 zone, defined as a support by the low of May 8th.

Shifting attention to our short-term oscillators, we see that the RSI has just crossed below 30 and continues to point south, while the MACD lies below both its zero and trigger lines, pointing down as well. Both indicators suggest strong downside speed and support the notion for further declines in this exchange rate.

In order to start examining the bullish case, we would like to see a strong recovery above today’s peak, at around 107.86. This would take the rate above the aforementioned upside line and may initially open the path towards the 108.25 barrier, marked by an intraday swing high formed yesterday, as well as by the inside swing low of Monday. If that level is not able to stop the bulls either, then extensions towards the 108.62 area could be possible. That area is marked as a resistance by the inside swing low of June 4th.

USD/JPY 4-hour chart technical analysis

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