The pattern, which was revealed by the USD/JPY on Tuesday, was broken at midnight to Thursday. The rate broke out to the upside and reached the 108.00 level.
At that level, the rate met with the weekly S1 simple pivot point, which caused a decline. By the middle of Thursday's GMT trading hours the pair had almost reached the 107.50 level.
Economic CalendarOn Thursday, all attention is expected to be set on the weekly US Unemployment Claims. During the last weeks this announcement has been revealing shocking data, as during the two week period almost ten million US workers claimed unemployment benefits. The unemployment claims were previously ignored as they had stopped causing market reactions.
USD/JPY short-term daily review
It is likely that the exchange rate could gain support from the 55– and 100-hour SMAs in the 107.40/107.70 area. Thus, some upside potential could prevail in the market.It is likely that the exchange rate could remain under pressure of the 55-hour SMA near 107.50 and trade downwards in the short term. In this case the rate could gain support from the Fibo 38.20% and the weekly S3 at 106.86.
However, note that the currency pair would have to surpass the resistance level formed by the Fibo 50.00% and the 200-hour SMA at 108.35. If the given level holds, it is likely that the pair could consolidate in the short run.
Hourly Chart
On the daily candle chart, the rate keeps bouncing off the resistance of the 55, 100 and 200-day simple moving averages, which are located from 108.00 to 109.00.
On Thursday, the rate had faced the resistance of the 200-day SMA.
Daily chart
Read More: Technical Analysis
Short sentiment continues to decline
On Wednesday, 58% of trader open position volume on the Swiss Foreign Exchange was in short positions.
By the middle of Thursday's trading, the sentiment had become 55% short.
Previously, open position volume had been above 60% short since the start of April.