USD/JPY: Failure to find equilibrium above 114.00

Cycles & Levels: From a weekly perspective, we’ve come to a key juncture between 114.00/115.00. On the daily, while the up-cycle remains active, the price is having difficulties finding equilibrium above 114.00. In case of any setback, 112.85/113.00 is the next key area of support as highlighted above. On the hourly, the up-cycle remains in place with the risk of entering a potential range as marked by the black box (we’ll need a double bottom + 50% midpoint retrace). Even if the pair starts breaking lower, sellers will be faced with frequent intervals of intraday support as depicted. The key area of confluence to the downside remains 113.35/40 (static + dynamic support in the form of an ascending trendline).

Correlations & Volumes: The decline in the US vs JP yield spread, the ‘risk-off’ conditions firmly present, along with the 114.00 candle rejection on Monday, are all factors that heighten the risk of a setback in the developing bullish run. However, I am expecting any down-plays to be faced with far strong hurdles to see progress as players will have to fight the trend and battle through intraday supports. A break sub-Monday’s low will be the first sign of trouble.