USD/JPY Mid-Day Outlook

Daily Pivots: (S1) 95.40; (P) 95.78; (R1) 96.44; More.

USD/JPY rebounds again but after all it's still bounded in range of 94.87/96.56. Intraday outlook remains neutral for the moment. As noted before, while another fall cannot be ruled out with 96.56 resistance intact, we still expect downside to be contained by 93.84/94.44 support zone and bring strong rebound to complete whole triangle consolidation that started at 99.67. On the upside, above 96.56 resistance will suggest that fall from 98.87, which is treated as the fifth leg in the triangle consolidation, has finally completed and should target this resistance next.

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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