USD/JPY Mid-Day Outlook

Daily Pivots: (S1) 94.57; (P) 95.02; (R1) 95.32; More.

USD/JPY continues to stay in 93.84/94.44 support zone and intraday outlook remains neutral for the moment. The preferred case is still that fall from 98.87 is the fifth leg of triangle consolidation that started at 99.67 and should be contained by 93.84/94.44 support zone. Strong rebound from current level, followed by break of 95.44 resistance, will affirm this case and turn short term outlook bullish for a test of 96.96 support next. However, note that sustained trading below 93.84/94.44 support zone will invalidate this view bring much deeper medium term decline.

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 pave 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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