USD/JPY outlook: Initial reversal signal requires more work at the upside for confirmation

Slobodan Drvenica Windsor Brokers

USD/JPY

USDJPY edges higher on Monday after a pullback from new record high (160.19) was contained by strong Fibo support at 151.72 (61.8% retracement of 146.48/160.19 upleg, reinforced by 55DMA).

Strong rejection here left a Hammer candle on Friday, initial signal of reversal, which could be boosted if today’s bounce completes a bullish engulfing pattern.

However, more evidence is still required to generate reversal signal (break and close above 155.04 (Fibo 38.2% of 160.19/151.85 bear-leg).

Conflicting daily studies (negative momentum/mixed setup of MA’s / oversold stochastic) lack clearer direction signal for now.

Sustained break above 155.04/29 (Fibo/10DMA) to firm near-term structure and signal bottom (151.72) and open prospects for further recovery.

Conversely, the downside will remain vulnerable if recovery fails to regain 155.04 pivot, with increased downside risk expected on rejection at initial Fibo barrier at 153.82 (23.6% of 160.19/151.85).

Res: 154.00; 155.04; 155.50; 156.02.
Sup: 152.76; 151.72; 150.00; 149.72.

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

1. R3 155.85
2. R2 154.81
3. R1 153.93
PP 152.89
1. S1 152
2. S2 150.97
3. S3 150.08

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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