USD/JPY Mid-Day Outlook

Daily Pivots: (S1) 77.24; (P) 77.52; (R1) 77.90; More.

USD/JPY continues to struggle around 4 hours 55 EMA and intraday bias remains neutral. On the upside, above 78.09 will flip bias to the upside to extend the rise from 76.57. But we'd expect strong resistance below 79.52 to limit upside and bring another fall to extend the consolidation from 79.52. On the downside, below 77.13 should flip bias to the downside and target 76.57 and below.

In the bigger picture, there is no sign of long term trend reversal in USD/JPY yet even though downside momentum is diminishing with bullish convergence condition in weekly MACD. USD/JPY is still trading inside the falling channel that started back in 2007 at 124.13, and below the falling 55 weeks EMA. Not to mention that it's far below the falling 55 months EMA. Rebound from 75.56 low could extend higher and beyond 80 psychological level. But it could turn out to be a corrective three wave rally in the end. So, we'd at least prefer to see sustained break of 55 weeks EMA (now at 80.15) to before considering the case of reversal. And break of 85.51 resistance will need to confirm. Otherwise, anything happens now will be viewed as corrective and an eventual break of 75.56 low to 70 psychological level is still favored.

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