- USD/JPY regains upside momentum after crossing the multi-month high the previous day.
- Overbought RSI, bearish candlestick formation challenges further upside.
- Weekly support line restrictions immediate downside ahead of the 10-DMA.
USD/JPY grinds higher around intraday top near 134.70 heading into Tuesday’s European session.
In doing so, the yen pair ignores the previous day’s Doji candlestick, as well as overbought RSI (14) line. However, the quote’s failure to refresh the multi-day top, after rising to the highest since 1998 the previous day, keeps sellers hopeful.
That said, a one-week-old ascending support line, near 133.80 restricts immediate USD/JPY downside ahead of the 10-DMA support of 132.75.
It’s worth noting that the USD/JPY pair’s weakness past 132.75 highlights the key horizontal support around 131.30, comprising tops marked during late April and early May, a break of which could recall the bears.
Meanwhile, multiple tops marked during early 2002 challenge the USD/JPY pair’s immediate upside moves near 135.15-20, not to forget Monday’s Doji and overbought RSI line.
Should the yen portrays a daily closing beyond 135.20, the odds of witnessing a run-up towards the late 1998 peak surrounding 137.25 can’t be ruled out.
To sum up, USD/JPY bulls seem running out of steam but the sellers need validation before retaking the control.
USD/JPY: Daily chart
Trend: Pullback expected