Richard Perry
Independent Analyst
USD/JPY
After an initial test of the support around 107.85 yesterday, the bulls responded well in the latter half of the session to form a strong positive candlestick. A rebound has taken the market back into the overhead supply band of 108.40/108.50. Given the magnitude of yesterday’s candle (+37 pips on the day), the reaction during today’s session will be very interesting. We have seen a marked deterioration in the medium term outlook on RSI (decisively below 40) and MACD lines (below neutral). It now suggests that this is now likely to be a medium term range between 107.85/109.70. However, if this rebound fails quickly to find a lower high under the first reaction high 108.85 (which is now under the old pivot of 109.00) then the selling pressure could ramp up once more. Closing back under the resistance band 108.40/108.50 would be disappointing. The bulls need a move back above 109.00 to really begin to feel more secure within this range.
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