The Yen on the D1 time frame was in an extended uptrend that lasted until the 9th of May when a last higher top was recorded at 131.338. A closer look at the Momentum Oscillator revealed negative divergence between point ‘a’ and ‘b’ when comparing the higher tops at 131.240 and 131.338. This should have alerted technical traders that a possible change in market direction was a possibility.
After the higher top at 131.338 the price broke through the 15 Simple Moving Average (SMA) and the Momentum Oscillator changed direction to the supply side, both further confirming a possible change in market momentum.
A likely critical support level formed when a lower bottom was recorded on 12 May at 127.510. Bulls united and tried their best to pull the price higher until reaching the 15 SMA resistance level on 17 May at 129.772. At that point the bears started gaining momentum again.
On 19 May the bears succeeded in breaking through the critical support level at 127.510 and three possible price targets were projected from there. Attaching the Fibonacci tool to the lower bottom at 127.510, and dragging it to the lower top at 129.772, the following targets were calculated. The first target was estimated at 126.112 (161.8%). The second price target was calculated at 123.850 (261.8%) and the third and final target may be expected at 120.190 (423.6%).
If the resistance level at 129.772 is broken, the above scenario is null and void and any open risk should be removed. As long as the market participants maintain a negative sentiment, the outlook for Yen on the D1 time frame will remain bearish.
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