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USDJPY Signs of Trend Exhaustion | Potential Price Correction
USDJPY has been forming one new high after another in the past few trading days, suggesting a very strong uptrend for the pair. However, price might be due for a market correction sooner or later, which could lead more buyers in.
At the moment, the pair is finding resistance near the 107.00 major psychological level, with a possible retreat to the 106.00 handle or the 105.00 major support zone. This lines up with the 100 simple moving average, which has held as dynamic support for price pullbacks.
A deeper retracement might last until the 200 simple moving average, which is near the 104.00 handle. Stochastic is reflecting heavily overbought conditions, which suggests that sellers are eager to jump in or that buyers are exhausted and may be looking to book profits off their long trades soon. MACD is also reflecting that the trend is overdone and that a market correction is about to take place.
However, with the FOMC statement set for this week, there is still a strong chance for a sudden upside break past the 107.00 area and on the way to more new highs for the pair. The next resistance zone is at the 108.00 handle then at the 109.00 major psychological mark.
EURJPY Return of Selling Pressure | Retracement or Reversal?
EURJPY is finding resistance at its current levels and indicating a pickup in selling pressure, which could be the start of either a major retracement or a trend reversal. Applying the Fibonacci retracement tool on the latest swing high and low of the 4-hour chart shows that the 138.00 major psychological level lines up with the 38.2% Fib, which is also close to the 100 simple moving average.
Meanwhile, the 50% Fibonacci retracement level also lines up with the 200 simple moving average and the 137.50 minor psychological level, which could also hold as support if the correction is deeper. The line in the sand for a market correction is the 137.00 major psychological level, which is close to the 61.8% Fibonacci retracement level.
For now, stochastic is reflecting a strong run in selling momentum, which still leaves the possibility of a trend reversal. A break below the 137.00 handle could confirm this and probably take EURJPY all the way down to the swing low near the 136.00 major psychological support.
Meanwhile, MACD is cruising sideways but is still indicating a bit of selling pressure, which suggests that price might have difficulty breaking past the 139.00 area without a market correction taking place first
AUDUSD Major Support Breakdown | Downtrend Below .9000 Mark
AUDUSD has recently broken below a key support zone at the .9200 major psychological level then gapped below the .9000 handle over the weekend, indicating that sellers are piling on their short positions for the pair. However, stochastic has already dipped into the oversold zone, hinting at a possible bounce.
MACD is also reflecting that the selloff may be overdone, which also supports the case for a small market correction before the downtrend resumes. The gap could get filled or a retracement might take place until the previous area of interest between .9100 to .9200. Further gains past this level would be a sign of a market turn and a possible longer-term uptrend.
On the other hand, a sustained break below the next support zone at .8900 could be indicative of increased selling pressure, which might take the pair all the way down to the previous lows at the .8700 major psychological level. Do take note though that the 200 SMA is still moving below the 100 SMA, and a downward crossover by the short-term SMA could confirm the potential selloff.