Chart of the day USDJPY still vulnerable for a potential short term bearish breakdown

Short-term technical outlook on USD/JPY

Key technical elements

• Since the start of 2017, the USD/JPY has continued to evolve within a range configuration with its resistance at 115.00 and support at 108.15 (see daily chart).
• In the short-term, the pair is trading within a bearish descending channel in place since 11 July 2017 high (see 1 hour chart).
• The significant key short-term resistance now stands at 110.10 which is defined by the upper boundary of the aforementioned short-term descending channel, the upper boundary of “bearish flag” continuation chart pattern in place since 18 Aug 2017 minor swing low and a Fibonacci cluster.
• The daily RSI oscillator remains below its corresponding pull-back resistance at the 52% level. This observation suggests that there is still a lack of medium-term upside momentum in price action.
• The next significant short-term support rests at 108.30/15 zone which is defined by the 17 April 2017swing low area.

Key levels (1 to 3 days)

Intermediate resistance: 109.80

Pivot (key resistance): 110.10

Supports: 108.90, 108.65 & 108.30/15

Next resistance: 111.00

Conclusion

The aforementioned short-term negative technical elements may trigger a bearish breakdown on the USD/JPY from its minor ascending range (bearish flag) configuration in place since last Friday, 18 August swing low area of 108.65.  As long as the 110.10 key short-term pivotal resistance is not surpassed and a break below 108.90 (lower limit of the bearish flag) is likely to open up scope for a further potential drop to retest 108.65 before targeting the next support at 108.30/15 next.

However, a clearance above 111.10 should invalidate the preferred bearish bias to see an extension of the corrective rebound from 18 August 2017 low to test the 111.00 key medium-term resistance next.

Charts are from eSignal

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