Hello traders! In our previous analysis, we have mentioned the potential strength of the Japanese Yen across the board and presented analysis on CHF/JPY currency pair. This time we’ll look at the most popular JPY pair, which is USD/JPY.
Recently price broke below the uptrend trendline, after which formed a very strong resistance area. The 107.60 – 107.45 resistance area is located between the breakout point of the trendline and 61.8% Fibonacci retracement level. But at the same time, 107.45 level is also confirmed by 78.6% Fibs applied to the corrective wave up after breaking the 50 Exponential Moving Average.
All-in-all, the resistance area has been respected for two consecutive times, while the price continues to produce lower lows. Today USD/JPY yet again broke below the 50 EMA, and perhaps this could be the starting point for a stronger wave down.
The support is seen at 161.8% Fibs applied to the correction after breaking the EMA. It is located at 105.40, which is 148 pips away from the current price. While this week USD/JPY might still range, next week we should certainly see some price action.
On the upside, if there will be a 4h break and close above the 107.60 resistance, the downside scenario will be invalidated, and perhaps wide consolidation will get started.
Bias: Strongly bearish while below 0.8611
Potential Resistance Zone: 0.8500 – 0.8600
Potential Targets: 0.8185
Have a profitable trading!