USD/JPY – 85.43

New Strategy   :  

Stand aside

As indicated in our previous update, the greenback has continued to move lower and dropped below the Ichimoku cloud bottom, suggesting the rebound from 84.72 has ended at 86.39 and consolidation with mild downside bias is seen for weakness towards 84.94 support, however, break there is needed to confirm early decline has resumed and bring retest of 84.72, then towards 84.40/50.

Would not chase this move here and we prefer to stand aside for now and look to turn short on recovery as upside should be limited to the Kijun-Sen (now at 85.86) and resistance at 86.39-46 should continue to cap dollar’s upside. Only breach of this resistance area (this also include 50% Fibonacci retracement of 88.12 to 84.72) would extend the upmove from 84.72 temporary low for stronger retracement of early decline to next resistance at 86.89 (just above 61.8% Fibonacci retracement), however, 87.30 (38.2% Fibonacci retracement of 91.48 to 84.72) should hold.