USDJPY fell to its lowest level since October 2014 on Tuesday to touch 110.50. After trading in a broad range since early February, prices broke below the key 111.00 level.
The market is testing a key long term Fibonacci level at 110.40. This is the 61.8% retracement of the upleg from 100.81 to 125.84 (May 2014 to May 2015 rise). If this level fails to support prices, and there is a break below the key 110.00 level, there is scope for a further decline to target the next Fibonacci level 106.16.
RSI is falling and heading to oversold conditions at 30. Below this level there would be consolidation in the market.
Near term resistance lies at 111.00 and above this at 112.60. A bounce back above 111.00 would bring the bias back to neutral but a daily close below 111.00 would shift the bias to bearish.
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