The Japanese Yen has pared some of its recent gains with USD/JPY now probing initial resistance on this rebound. The question remains on whether a low is in after price reversed off a cleared measured objective this week- the focus is on possible failure just higher with the pullback to offer clarity on whether this advance is a correction or a larger shift in trend.

USD/JPY DAILY PRICE CHART

Technical Outlook: In this week’s Technical Perspective, we highlighted that, “The Japanese Yen may be poised for further strength (USD/JPY lower) after breaking below slope support (red) last week. Note that momentum does look a bit tired here and the possibility for a near-term recovery remains- that said, look for resistance ahead of last week’s high / the March open at 106.64/66.”

Price has been trading within the confines of broad descending pitchfork formation extending off the November highs with price posting an outside-day reversal off the lower 50-line yesterday. The rebound is now testing initial resistance at the median-line and we’re looking for initial exhaustion here. IF price breaches, look for an extended recovery towards 106.38 & 106.66(also areas of interest for entries). Broader bearish invalidation is steady at 107.45/84– a breach there would suggest a more significant low is in place. A break below the weekly open puts the bears back in control targeting confluence support at 104.32 backed by critical long-term support at 103.04/40.

USD/JPY 240MIN PRICE CHART

Notes: A closer look at near-term price action further highlights near-term resistance here at 105.88 where the 38.2% retracement converges on former trendline support. Note that momentum has continued to hold sub-60 and we’ll want to see this condition hold for the current short-bias to remain viable. Interim support rests at 105.25 with a break below the 100% extension at 104.64 targeting 104.32 backed by the 103.48.