USD/JPY Daily Outlook

Daily Pivots: (S1) 103.78; (P) 104.18; (R1) 104.83; More.

USD/JPY edges higher to 104.71 today but after all upside momentum is unconvincing. Nevertheless, further rally is still in favor as long as 103.49 support holds and the whole rebound from 95.77 could extend further to 104.96/108.59 resistance zone. However, below 103.49 will be the first signal that rebound from 95.77 has completed with bearish divergence condition in 4 hours MACD and RSI. This will put focus back to lower channel support (now at 102.33). Break will add more credence to this case and bring further fall to 100.02 support.

In the bigger picture, break of 103.59 cluster resistance, as well as 55 days EMA (now at 103.31) argues that a medium term bottom is in place after down trend from 124.13 has just met 76.4% retracement of 79.75 to 147.68 at 95.78. Focus is now on 108.59 resistance and break of which will break a series of lower highs, lower lows pattern that started at 124.13 and will confirm that this down trend has completed already. In such case, stronger medium term rebound should then be seen to retest 114.77 resistance first.

However, failure below 108.59, followed by break of 100.02 support will firstly indicate rebound from 95.77 has completed. Secondly, it will keep the lower higher, lower lows pattern intact and suggest that down trend from 124.13 is still in force.

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