USD/JPY Mid-Day Outlook

Daily Pivots: (S1) 107.89; (P) 108.50; (R1) 108.89; More.

USD/JPY spikes lower to 105.52 in early US session but quickly recovers back to established tight range. Nevertheless, intraday bias remains on the downside as long as 107.41 minor resistance holds. Further fall is still expected towards 103.76 support first. Above 107.41 will suggest an intraday low is in place and bring stronger recovery but upside should be limited below 109.18 resistance and bring another decline.

In the bigger picture, the break of medium term trendline support (95.77 to 103.76) indicates that whole medium term rebound from 95.77 should have completed with at 110.66 with bearish divergence condition in daily MACD. Further break of 103.76 support will confirm this case. Also, note the three wave structure of the rise from 95.77 to 110.66 argues that it's merely a correction in the larger down trend. Hence, in such case, deeper medium term decline should be seen to retest this 95.77 low. On the upside, though, above 109.18 will firstly suggest that fall from 110.66 is probably completed. Secondly it will dampen the bearish case and suggests that rise fro 95.77 is probably still in progress.

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