USD/JPY Outlook: consolidation below 100DMA likely to precede fresh push higher

Slobodan Drvenica Windsor Brokers

USD/JPY

The pair is taking a breather after steep six-day rally faced headwinds important barriers at 108.10/16 (falling 100DMA / Fibo 76.4% of 109.31/104.44).
Thursday’s action failed to close above these barriers and today’s fresh attempts higher were so far short-lived.
Near-term picture remains bullish and favors further upside after positive signals were generated on Thursday’s rally and close well above falling daily cloud as well as close above Fibonacci 100% expansion of wave C from 105.73 (30 Sep trough).
Consolidation scenario is also signaled by fading bullish momentum and stochastic reversing in overbought territory.
Dips should be ideally contained by daily cloud top (107.59) / broken Fibo 61.8% (107.45) before bulls resume, as the pair is on track for the third consecutive strong bullish weekly close that adds to positive outlook.
Caution of deeper pullback on break below 107.59/45 (daily cloud twists next week and could be magnetic) as well as positioning ahead of Fed that may delay bulls.
Converging 55/10DMA’s 107.22/09 mark next solid supports.

Res: 108.10; 108.25; 108.84; 109.00
Sup: 107.90; 107.59; 107.45; 106.88

Interested in USD/JPY technicals? Check out the key levels

1. R3 109.03
2. R2 108.61
3. R1 108.36
PP 107.94
1. S1 107.68
2. S2 107.27
3. S3 107.01

Author

Slobodan Drvenica

Windsor Brokers

Industry veteran with over 22 years’ experience, Slobodan Drvenica joined Windsor Brokers in 1995 when he was an active trader for more than 10 years, managing the trading desk and own account departments.

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