USD/JPY prepares to test support at 111.20
In line with expectations, by the end of the previous trading session the currency rate has reached the upper boundary of a currently active descending channel. As this barrier was additionally backed up by the 38.2% Fibonacci retracement level as well as the falling 100-hour SMA, the pair was forced to rebound. During first half of the day the pair is likely to get back to the 11.60 mark amid the push made by the 55-hour SMA. But subsequently the pair is expected to test support area between the 111.20-111.10 levels. Unless the Yen receives a proper impulse this barrier might ruin the pattern. However, such scenario unlikely to lead to rapid recovery of the buck, as on daily chart road to north is blocked by a combination of the 100- and 200-day SMAs.
In line with expectations, by the end of the previous trading session the currency rate has reached the upper boundary of a currently active descending channel. As this barrier was additionally backed up by the 38.2% Fibonacci retracement level as well as the falling 100-hour SMA, the pair was forced to rebound. During first half of the day the pair is likely to get back to the 11.60 mark amid the push made by the 55-hour SMA. But subsequently the pair is expected to test support area between the 111.20-111.10 levels. Unless the Yen receives a proper impulse this barrier might ruin the pattern. However, such scenario unlikely to lead to rapid recovery of the buck, as on daily chart road to north is blocked by a combination of the 100- and 200-day SMAs.
After making a rebound from the upper edge of the currently active descending channel, the pair slipped through the 38.2% Fibonacci retracement level and landed on the weekly S1 at 110.84. As early hours of the current trading session did not bring any significant news, the pair made a rebound and approached the upper trend-line for the second time. As the boundary is secured by the falling 55- and 100-hour SMAs, it is unlikely that bulls will manage to break the pattern.
On the other hand, a reaction on various events in the United States might lead to short-term spike to the 111.60 level. However, even in case this scenario materializes, the general downtrend should not be affected due to resistance formed by the 100- and 200-day SMAs that are explicitly seen on daily chart.