The weekly chart shows a bullish engulfing candle formed last week, which marks 140.25 as an important swing low. Whilst we remain unconvinced the pair will simply break above 152, it does show the potential to extend its countertrend bounce.
However, with the pair stalling beneath last week’s high ahead of a key US inflation report, the potential for a pullback seems feasible. The 4-hour chart shows that a bearish divergence is forming with RSI (14) and the US2yr-JP2yr spread. Given last week’s high was just shy of 146 and the monthly S1 pivot, we’re on guard for a double top to send prices lower. Therefore, bears could fade into moves towards 146 with a stop above the monthly S1 pivot at 146.15.
For a large bearish reaction over the next 24 hours, we’d likely need to see a softer set of numbers from the US inflation report relative to expectations.
However, with the pair stalling beneath last week’s high ahead of a key US inflation report, the potential for a pullback seems feasible. The 4-hour chart shows that a bearish divergence is forming with RSI (14) and the US2yr-JP2yr spread. Given last week’s high was just shy of 146 and the monthly S1 pivot, we’re on guard for a double top to send prices lower. Therefore, bears could fade into moves towards 146 with a stop above the monthly S1 pivot at 146.15.
For a large bearish reaction over the next 24 hours, we’d likely need to see a softer set of numbers from the US inflation report relative to expectations.
