USD/JPY Mid-Day Outlook

Daily Pivots: (S1) 95.61; (P) 95.96; (R1) 96.19; More.

USD/JPY's break recovered after hitting 94.98 earlier today and break of 95.71 minor resistance suggests that an intraday low is formed. Outlook is turned neutral for the moment. Below 94.98 will bring another fall but as mentioned before, since we're treating fall from 98.87 as the final leg of triangle consolidation that started at 99.67, we'd expect downside of the current fall to be contained by 93.84/94.44 support zone and bring strong rebound. On the upside, further break of 97.18 resistance will indicate that such fall has completed and will bring rally to test 98.87 resistance.

In the bigger picture, price actions from 99.67 are treated as consolidation in the larger up trend from 87.12 only, in form of triangle pattern. Fall from 98.87 is viewed as the final leg of such consolidation and should be contained above 93.84 support to conclude the consolidation. Break of 98.87 will be an important signal that whole rally from 87.12 is resuming and break of 101.43 will path the way to next key level at 110.65.

However, note that a break below 93.58/84 support zone will invalidate the bullish case. Instead, it will revive the bearish case that USD/JPY has completed a head and shoulder top (ls: 99.67, h: 101.43, rs: 98.87) and will in turn indicate that whole down trend from 124.43 is still in progress.

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