USD/JPY Mid-Day Outlook

Daily Pivots: (S1) 106.19; (P) 107.02; (R1) 107.99; More.

USD/JPY's short term outlook remains mixed for the moment and further choppy consolidation could be seen inside range of 105.52 and 109.18. On the downside, below 106.06 will add favors to the case that recent decline is still in progress. Further break of 105.52 support will confirm recent fall from 110.66 has resumed and reaffirm the bearish outlook. Deeper decline should then be seen towards 103.76 support first. On the upside, above 107.95 will encourage stronger rise to 109.18. but break of 109.18 resistance is needed to invalidate prior bearish view, indicating firstly that correction from 110.66 has completed, secondly, whole medium term rally from 95.77 is still in progress despite the brief break of trend line support last week. Otherwise, further downside is still in favor.

In the bigger picture, the break of medium term trend line 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, however, 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. Above 110.66 will encourage further rise to 61.8% retracement of 124.13 to 95.77 at 113.30.

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