USDJPY bears set a trap around the 104.00 level early on Monday, pressing the price towards the familiar 103.70 – 103.64 support area.
The technical picture endorses the descent in the price as the RSI heads towards its 30 oversold level, the stochastics are reversing south and the MACD strengthens its negative momentum below its signal and zero lines. Yet, the 103.70 – 103.64 zone has been quite defensive to bearish actions since mid-November and whether it would abandon its protective role remains to be seen.
If the sell-off persists below 103.64, the next turning point may commence around 103.40. If the latter proves easy to claim, the focus will turn straight to the 103.16 – 103.00 zone, where any break lower would signal a bearish trend continuation.
Otherwise, a bounce off the 103.70 level, which is also the 78.6% Fibonacci retracement of the 103.6 – 105.66 up leg, could fade somewhere between the 61.8% and 50% Fibonacci numbers at 104.16 and 104.40 respectively. Still, only a significant break above the March descending trendline currently seen slightly above the 38.2% Fibonacci of 104.71 would make any upward move credible.
In brief, the short-term risk for USDJPY is looking negative, with the pair expected to come under fresh selling pressure below 103.64.
