Daily Pivots: (S1) 112.72; (P) 113.80; (R1) 114.44; More…

USD/JPY’s sharp decline and break of 113.60 support invalidated our view of reversal. Instead, the development suggests that consolidation pattern from 111.58 has completed with three waves to 115.49. Intraday bias is now turned back to the downside for 111.58 first. Break of 111.58 will extend the correction from 118.65 and would target 61.8% projection of 118.65 to 111.58 from 115.49 at 111.12. That coincides with 38.2% retracement of 98.97 to 118.65 at 111.13. We’d tentatively expect strong support from there to bring rebound. But firm break there will target 100% projection at 108.42. On the upside, outlook will stays bearish as long as 115.49 holds, in case of recovery.

In the bigger picture, price actions from 125.85 high are seen as a corrective pattern. The impulsive structure of the rise from 98.97 suggests that the correction is completed and larger up trend is resuming. Decisive break of 125.85 will confirm and target 61.8% projection of 75.56 to 125.85 from 98.97 at 130.04 and then 135.20 long term resistance. Rejection from 125.85 and below will extend the consolidation with another falling leg before up trend resumption.

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