According to last week’s JPY COT report we can see something interesting. Even though the JPY is overall dominating with its long size contracts, we can see that there is a sudden increase with the short ones as well.
The size of the third and final downtrend wave is determined by how fast the dollar can recover and therefore we have 2 possible scenarios for USDJPY: 1. The current downtrend comes to an end due to the demand pressure coming from the weekly critical zone 104.500. Afterwards it will move towards the weekly upper trendline near 110.000. 2. Price breaking the weekly critical and going towards the daily critical near 101.000. After that it will once again gain an upward momentum for a third touch with the weekly upper trendline.
Strong rejections from those areas will be good confirmation points for our USD/JPY entries.