The USDJPY weekly chart has had five weeks of gains since its November low (aqua ellipse). One of the reasons for this is that the JPY is considered a haven. The fact that it has been depreciating against the USD indicates a risk-on sentiment. Given this, it is no surprise that equity markets had a strong December. However, we note that the currency pair's RSI has moved into an overbought condition (blue rectangle). The blue verticals show the previous times that the RSI turned overbought over the last 12 months. Each of these placed a temporary price cap on the USDJPY (green rectangle) until the indicator normalised. It is unlikely for the RSI to remain overbought for an extended period, and, as such, the current price may be near the apex for this impulse move up.
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Senior Market Specialist
Russell Shor joined FXCM in October 2017 as a Senior Market Specialist. He is a certified FMVA® and has an Honours Degree in Economics from the University of South Africa. Russell is a full member of the Society of Technical Analysts in the United Kingdom. With over 20 years of financial markets experience, his analysis is of a high standard and quality.