USD/JPY Mid-Day Outlook

Daily Pivots: (S1) 109.17; (P) 109.56; (R1) 109.98; More.

USD/JPY's retreat was contained at 108.70 and recovers in early US session. The three wave structure of the fall from 110.27 to 108.70 suggests that it's merely a correction to rise rom 108.13. Though, outlook remains neutral for the moment. Break of 109.92 minor resistance will add more credence to this case and encourage stronger rise to 110.66. Break will confirm that recent rally has resumed for next target of 61.8% projection of 95.77 to 108.58 from 103.76 at 111.68.

On the downside, firstly, below 108.70 will dampen this above case and bring deeper fall to 108.13 low. Also, note, though earlier, that the possibility of a short term head and shoulder top (110.4 110.66, 110.27). Break of 108.13 will indicate recent up trend has possibly reversed and and much deeper decline should the be seen to test medium term rising trendline support (now at 106.49).

In the bigger picture, USD/JPY has made a medium term bottom after down trend from 124.13 has just met 76.4% retracement of 79.75 to 147.68 at 95.78. Rebound from 95.77 is still in progress and should be targeting 61.8% projection of 95.77 to 108.58 from 103.76 at 111.68 first. Break will bring further rise to 61.8% retracement of 124.13 to 95.77 at 113.30.

However, considering bearish divergence condition in daily MACD, break of 106.04 support and sustained trading below the trend line support (99.57, 103.75, now at 106.47) will argue that whole medium term rebound from 95.77 has completed. Focus will then be turned back to 103.76 support and break will confirm this case and turn outlook bearish again.

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