USD/JPY Mid-Day Outlook

Daily Pivots: (S1) 107.85; (P) 108.51; (R1) 109.26; More.

USD/JPY continues to stay in tight range today. Outlook remains neutral and more choppy sideway trading could still be seen. On the downside, break of 107.62 will indicate that fall from 110.66 has resumed for medium term trend line support (now at 106.95). Considering bearish divergence in daily MACD, such reversal pattern argues that whole rise from 95.77 has completed too. Decisive break of the trend line support will add more credence to this case and bring deeper fall to 103.76 first. On the upside, break of 110.27 resistance will indicate that consolidation from 110.66 has possibly completed and recent up trend has resumed for 111.68 fibo target.

In the bigger picture, momentum of the medium term rise from 95.77 is seen diminishing with bearish divergence condition in daily MACD. Though, such rise could still be in progress as long as the trend line (95.77 to 103.76) remains intact. Further rally could be seen to 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.

Sustained break of the trendline support will indicate that rise from 95.77 has made a top. Deeper fall should the be seen to 103.76 support first. Break of 103.76 will firstly confirm that rise from 95.77 has completed and turn medium term outlook bearish. Secondly. the lack of impulsive structure of the rise from 95.77 argues that it's merely a correction in the larger down trend. In other words, deep decline to retest of 95.77 level could be seen in this case.

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