USD/JPY Forecast: Technical correction to gather pace above 200-DMA

Resistance

108.65 (200-DMA)

109.87 (10-DMA)

110.11 (Mar 27 low)

110.27 (Apr 4 low)

Support

108.00 (channel support)

107.49 (July 21 high)

106.64 (38.2% fib retracement of 2011 low - 2015 high)

Daily Chart

• Despite the break below 200-DMA in Asia and a drop to a fresh 4-1/2 month low of 108.13, the falling channel support at 108.00 is likely to remain intact… courtesy of the oversold conditions as shown by the daily RSI.
• The technical correction could gather pace if the spot breaks above the session high of 108.81. Such a move would indicate a short-term low has been made and would shift risk in favor of a 110.11 (Mar 27 low).

EUR/JPY Forecast:  Short-term correction could be short lived

Daily Chart

Monthly chart

• The oversold nature of the daily RSI with prices hovering at a support offered by the expanding falling channel suggests the potential for a corrective move higher to the hourly 50-MA seen as of now at 115.65 and 10-DMA seen now at 116.76.
• However, the correction is likely to be short lived as suggested by the descending trend line on the monthly chart and the bearish monthly RSI.