Daily Pivots: (S1) 110.73; (P) 110.96; (R1) 111.13; More…
USD/JPY drops sharply to as low as 110.52 so far today but it’s staying above 110.02 resistance turned support so far. And it’s holding inside near term rising channel. Hence, intraday bias stays neutral and the consolidation from 111.39 should be relatively brief. Break of 111.39 will resume the rally from 104.62 to trend line resistance at 112.31. However, considering bearish divergence condition in 4 hour MACD, break of 110.02 will indicate short term topping. In that case, deeper pull back could be seen to 108.82 cluster support (38.2% retracement of 104.62 to 111.39 at 108.80) before completing the correction.
In the bigger picture, corrective decline from 118.65 (2016 high) has completed with three waves down to 104.62. Rise from 104.62 is possibly resuming the up trend from 98.97 (2016 low). This will be the preferred case as long as108.80 support holds. Decisive break of 114.73 resistance will confirm our view and target 118.65 and above.
