Weekly Chart
© Dukascopy Bank SA
An overwhelming majority of technical factors imply the directional risk being skewed to the downside, pointing out that the senior support might be losing strength. The pair has been consistently trading below the Ichimoku cloud with Tenkan-sen lying comfortably beneath Kijun-sen for a while now, implying strong bearish potential. Various time-frame SMAs lie above the channel in the weekly chart, pushing further down. A similar picture presents itself on the daily chart, where an additional SELL signal is sent by the 55-period and 100-period SMA crossover. The rate is, however, likely to surge in the short run, as implied by the symmetrical triangle developed since June.
Daily Chart
© Dukascopy Bank SA
Major risks beneath
We are looking for the pair to stay inside of the channel for now, making its way towards the upper channel trend-line at 77.35 which means a correction in between several support and resistance levels for now. 77.96, Senkou A resistance will be attempted at first, while the 77.48/78.22 area could cause some trouble with the multitude of significant levels squeezed one above the other. With a break above this area, the rate could put itself on a steeper track towards the upper channel trend-line.
In case the channel is not violated, 73.40, the lower Bollinger Band, is currently the only observable support level to watch. In case the pair does give in to the senior support level and does not attempt to reach for seven year lows, a move towards 83.21, the 55-week SMA would result in a retracement towards the broken trend-line around 81.49 where the general rally would extend to the 83 yen level (cloud resistance).
Aggregate Technical Indicators
© Dukascopy Bank SA
While the position distribution shows a 71% bullish sentiment in the SWFX market, implying the overbought currency pair to have bearish potential, aggregate technical indicators show a distinct uptrend short term with the only indicator pointing south on a monthly basis.
Significant fundamental factors slightly shook the market on Tuesday when Monetary Policy Meeting Minutes came out in Australia, following Monday which kept markets calm with a Japanese banking holiday.