USD/JPY Mid-Day Outlook

Daily Pivots: (S1) 77.22; (P) 77.51; (R1) 77.74; More...

USD/JPY drops further to as low as 76.71 in early US session and intraday bias remains on the downside for 76.55 support. Break there will confirm resumption of whole fall from 79.52 and in that case, deeper fall would be seen towards 75.56 low. On the upside, though, above 77.17 minor resistance will turn bias neutral and extend recent sideway trading in range of 76.55/78.28 instead.

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 79.60) 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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