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USD/JPY Technical Analysis: Downward Correction Resuming?
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Talking Points:
USD/JPY Technical Strategy: Flat
Sellers Retake Initiative After Prices Retest Broken Trend Line
Waiting for Correction Lower to Yield Long Trade Opportunity
The US Dollar is once again on the defensive against the Japanese Yen, with sellers reclaiming a foothold below the 120.00 figure. Prices swiftly recovered after dropping to within a hair of the 116.00 mark last week having plowed through trend line support set from mid-January. That bounce now appears corrective, with the pair seemingly resuming the nascent down trend after retesting support-turned-resistance.
Prices are attempting an intraday recovery to test the 14.6% Fibonacci expansion at 120.39, with a break back above this barrier on a daily closing basis exposing the August 28 high at 121.73. Alternatively, a move back below the 23.6% Fib at 119.56 opens the door for a challenge of the 38.2% expansion at 118.21.
Positioning is inconclusive at this point. The velocity of the rebound following the break below of 120.00 casts doubt on near-term downside follow-through, taking the pair back through immediate support-turned-resistance (119.56). Furthermore, the long-term uptrend set from September 2012 remains in play, suggesting current weakness is corrective. With that in mind, we will stand aside and wait for a buying opportunity to present itself after current volatility to plays itself out.
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