- USD/JPY snaps three-day uptrend while reversing from 1.5-month high.
- RSI retreat, bearish candlestick formation favor short-term sellers.
- Convergence of 10-DMA, three-week-old support line challenges further downside.
- Bulls need sustained trading beyond 139.00 to bolster the moves.
USD/JPY takes offers to refresh intraday low near 138.50 as it extends the previous day’s pullback from the six-week high during Wednesday’s Asian session. In doing so, the yen pair prints the first daily loss in four.
The quote’s latest weakness could be linked to the pair’s Doji candlestick formation, marked the previous day, as well as the RSI (14) pullback.
With this, the intraday sellers can aim for the August 23 swing high near 137.70. However, the 10-DMA and a three-week-long support line, near 137.45-40, appear a tough nut to crack for the bears.
Should the USD/JPY prices decline below 137.40, the early month high near 135.60-55 will be in focus.
Alternatively, recovery moves could aim for the horizontal line surrounding 139.00 that comprises multiple tops marked since mid-July.
Following that, the 140.00 threshold may act as an additional upside filter before portraying the USD/JPY rally.
Overall, USD/JPY is likely to witness further downside but the bears are far from retaking the control.
USD/JPY: Daily chart
Trend: Limited downside expected
