Right now, for the USD/JPY, the lower lows and lower highs pattern is in place. Price continues to decline while trading within the descending channel. During the past few days, USD/JPY has been rejecting the 50 Exponential Moving Average, which has been acting as the resistance.
But looking at today’s’ price action, there was a clean bounce off the 50% Fibonacci retracement level at 104.20 as well as the 50 EMA. This suggests that bears are strongly defending this resistance and as long as the price remains below, selling pressure could be increasing steadily.
If this will be the case, USD/JPY is expected to decline towards one of the Fibonacci support levels. The Fibs was applied to the last correction up, which occurred between 18-24 November. It provides two support levels to watch, namely 127.2% Fibs at 103.37 and 161.8% Fibs at 103.00, which is also a strong psychological level.
Therefore, a 120 downside move might occur throughout this and next week for the USD/JPY, potentially sending the price down to 103.00 or even slightly below. On the upside, a break above the 104.76 resistance will certainly invalidate the bearish forecast as a new higher high will be produced. In this scenario, the USD/JPY trend is likely to turn bullish, at least for the short term.
Key support levels: 103.36, 103.17, 103.00
Key resistance levels: 104.20, 104.35, 104.75
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Disclaimer: The analysis presented in this article is for educational purposes only and should not be considered as financial advice.
But looking at today’s’ price action, there was a clean bounce off the 50% Fibonacci retracement level at 104.20 as well as the 50 EMA. This suggests that bears are strongly defending this resistance and as long as the price remains below, selling pressure could be increasing steadily.
If this will be the case, USD/JPY is expected to decline towards one of the Fibonacci support levels. The Fibs was applied to the last correction up, which occurred between 18-24 November. It provides two support levels to watch, namely 127.2% Fibs at 103.37 and 161.8% Fibs at 103.00, which is also a strong psychological level.
Therefore, a 120 downside move might occur throughout this and next week for the USD/JPY, potentially sending the price down to 103.00 or even slightly below. On the upside, a break above the 104.76 resistance will certainly invalidate the bearish forecast as a new higher high will be produced. In this scenario, the USD/JPY trend is likely to turn bullish, at least for the short term.
Key support levels: 103.36, 103.17, 103.00
Key resistance levels: 104.20, 104.35, 104.75
Thanks for your support! If you liked this analysis, please support our profile with a 👍 and follow us to get a new daily analysis.
Disclaimer: The analysis presented in this article is for educational purposes only and should not be considered as financial advice.