USD/JPY reaching for the sky; RSI (14) overbought

FXStreet (Guatemala) - USD/JPY is currently trading at 121.68 with a high of 121.77 and a low of 121.64.

Is tempting the fill the bullish gap of the Asian open while the Nikkei opens mixed following the flat close on Wall street last week. The theme of course in equities is around the increased likelihood of a Fed hike before the year is out and the Yen will likely enjoy softer equities should sentiment weigh on corporates while for the meantime at least, the greenback will benefit on the divergence between the Central Banks.

Technically, new highs have been scored on the 13 handle and price now targets the 124.46 and 18th August highs with R1 at 124.01, R2 at 124.38 and R3 at 124.69. However, RSI (14) on the daily is into overbought territory and a period of consolidation is expected.

Analysts at BBH explained, "The next chart-based resistance area is seen in the JPY124.00-JPY124.50 area. The top of that range corresponds to the trend line drawn off the multi-year high set in June (~JPY125.85) and the August high (~JPY125.30).

The dollar's 50-day moving average moved below the 200-day average in October for the first time since the end of Q3 2014. This too seems to be a function of the extended sideways corrective activity. The cross can turn higher again later this month. "
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