USD/JPY encounters strong support level
- Contrary to expectations, the weekly S1 located at the 110.11 level proved to be a very strong support barrier.
- Namely, it managed to neutralize multiple attempts of the currency exchange rate to slide downwards, including the 34-pip fall that happened in the middle of the day, under pressure from the 55-hour SMA. As soon as the pair made a fully-fledged rebound, it started to climb upstairs, crossing the above 55- and 100-hour SMAs.
- Most likely, the surge will be stopped somewhere between the 111.00 – 111.20 levels, as they represent a location of the combined resistance level formed by the 200-hour SMA and the weekly PP.
- On gradual decay of the upside momentum also point out certain technical indicators, suggesting that strength of the uptrend is coming to an end.
The reason behind the 53-pips drop, most probably, was attributed to the 200-hour SMA that created an impassable resistance barrier.
Nevertheless, from the other side the fall of the rate was also constrained by the 55-hour SMA near 110.43. Since the pair proved to be sensitive to these two technical indicators, they can be temporarily marked as closest support and resistance levels, between which the pair is expected to move during today’s trading session.
However, given that the upside momentum hasn’t come to an end yet, the buck most likely is going to continue to try to move to the top.
A necessary impulse might be given by announcement of the US ISM Non-Manufacturing PMI and Factory Orders at 14:00 GMT.