The near term recovery on Dollar/Yen remains on track after a fourth bull candle in the past five sessions completed yesterday with a close above the breakout at 107.60. This morning there is a test of the recovery trend of the past week, as the market has slipped back to what is now support around 107.60. How this level is treated will be a gauge for the near term outlook. If the bulls can build on this support around 107.60 today, then the prospect of further recovery gains will grow. An improvement in momentum indicators is on track, but once more, RSI needs to hold above 50 and Stochastics continue to rise for the recovery to continue. The hourly chart suggests that this early slip back is counter to a recovery, as hourly RSI holds above 40 and MACD lines unwind to neutral. We noted yesterday that there is a support band 107.45/107.60 which is a buy zone. We still see this to be the case, but our conviction falters under 107.45. For now, we still favour a retest of initial resistance of the overnight high at 108.15.
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