Short-term technical outlook on USD/JPY
Key technical elements
- The USD/JPY has continued to inch lower from its major resistance zone of 114.70/115.00 since 06 November 2017. In addition, the daily RSI oscillator has staged a bearish breakdown from its significant corresponding trendline support at the 52% and still has room for further potential downside before it reaches an extreme oversold level. These observations suggest that medium-term downside momentum of price action has resurfaced (see daily chart).
- On the shorter-term, the pair has traced out a minor bearish reversal chart pattern, “Head & Shoulders” right below the major resistance zone of 114.70/115.00 with its corresponding neckline support of the pattern at 113.00 (see 1 hour chart).
- The next significant short-term support rests at 112.50/30 (minor swing low areas of 19 Oct 2017 + close to 1.00 Fibonacci projection of the on-going decline from 06 Nov 2017 high) follow by 111.70 next (medium-term swing low area of 25 Sep/13 Oct 2017 + 1.382 Fibonacci projection of the on-going decline from 06 Nov 2017 high.
- The intermediate resistance stands at 113.37 (pull-back resistance of the former minor “Expanding Wedge” support, depicted in orange) (see 1 hour chart).
- The key short-term resistance stands at 113.90 (yesterday’s high + Fibonacci cluster)
Key levels (1 to 3 days)
Intermediate resistance: 113.37
Pivot (key resistance): 113.90
Supports: 113.00 (downside trigger), 112.50/30 & 117.70
Next resistance: 114.30
The USD/JPY is now at risk of a minor bearish breakdown after a possible retest on the 113.37 intermediate resistance (given that the hourly Stochastic oscillator is coming close to its oversold region).
As long as the 113.90 key short-term pivotal resistance is not surpassed and a break below 113.00 is likely to open up scope for potential downside acceleration towards the next intermediate supports at 112.50/30 follow by 111.70 next in the first step.
On the other, a clearance above 113.90 shall negate the bearish breakdown scenario to see a squeeze up to retest the next resistance at 114.30 (07 Nov 2017 minor swing high & the major descending trendline from Jun 2015 high).
Charts are from eSignal
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