Morning Market Update – USD/JPY

USD/JPY dips after being rejected by the four-hour chart from 109.735 but stays above the 108.964 temporary low. Intraday bias remains bearish and more decline could be seen. The near term outlook stays bearish with the 109.735 resistance intact and a deeper decline is expected. A break of 109.124 will target a test on the 108.964 low. The whole corrective decline from 109.735 is possibly resuming and break of 109.124 will target at 109.124.

In the bigger picture, the corrective structure of the fall from 109.735 suggests that rise is completed. Break of 109.735 will target a test on 109.846 high. At this point, it’s uncertain whether the rise is resuming the long term up trend, or it’s a leg in the consolidation from current levels. Hence, we’ll be cautious on topping as it approaches 109.735. If fall from 109.735 extends lower, downside should be contained of 109.124 and bring rebound.

The current candle was another decline in the session where the bulls failed to make any sustainable impact, before once more resuming the decline from last week. The daily momentum indicators have all now taken on a corrective outlook, with the Stochastic both falling below 50. The pair is now back into the old pivot band 109.124 so it will be interesting to see the reaction. The likelihood is that the 109.124 support which has often been seen as an inflection point will now be tested. The four hourly chart shows the support bolstered now at a key level, with 109.124 initially an area of near term overhead supply.The USDJPY pair bounced bearishly to approach from the key support 109.124 again, which keeps the bearish trend scenario valid until now, supported by the negative pressure formed by the price action, waiting to break the mentioned level to confirm opening the way to head towards 108.674 that forms our next main target.

Stochastic reach to the 33.0 areas might force the price to provide some temporary sideways trading before resuming the expected decline, which will remain valid unless breaching 109.245 followed by 109.403 levels and holding above them.

The expected trading range for today is between 108.964 support and 109.485 resistance.

Expected trend for today: Bearish
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