Weekly
• Last Candlesticks pattern: Marubozu
• Time of formation: 14 Nov 2016
• Trend bias: Down
Daily
• Last Candlesticks pattern: Shooting star
• Time of formation: 15 Feb 2017
• Trend bias: Down
USD/JPY – 110.29
As dollar has recovered after falling to 109.11, suggesting consolidation above this level would be seen and corrective bounce to 110.90-00 cannot be ruled out, however, reckon resistance at 111.71 (this month’s high) would hold from here and bring another decline later, below said support at 109.11 would extend the fall from 114.37 to minor support at 108.88 but loss of near term downward momentum should prevent sharp fall below recent low at 108.13, risk from there is seen for another rebound later.
On the upside, whilst initial recovery to 110.90-00 is likely, reckon upside would be limited to 111.50-55 and bring another decline later. A daily close above 111.71-74 (previous resistance and current level of the Kijun-Sen) would defer and suggest low is possibly formed, bring a strong recovery to resistance at 112.13 but reckon upside would be limited to 112.45-50 but price should falter below 113.12 and the greenback shall head south again later this month.
Recommendation : Sell at 111.50 for 109.50 with stop above 112.50.
On the weekly chart, despite last week’s fall to 109.11, lack of follow through selling and the subsequent rebound formed a doji star, hence consolidation above this level would be seen and test of the Tenkan-Sen (now at 111.25) cannot be ruled out, however, reckon upside would be limited to resistance at 111.71 and bring another decline later, below the lower Kumo (now at 109.38) would bring retest of 109.11, break there would extend the fall from 114.37 to 108.65-70 but reckon previous chart support at 108.13 would hold on first testing. In the event dollar drops below said support at 108.13, this would signal the fall from 118.66 top has resumed and extend weakness towards previous resistance at 107.49.
On the upside, expect recovery to be limited to 111.50 and resistance at 111.71 should hold, bring another decliner. Above said resistance at 111.71 would bring test of previous resistance at 112.13 but only break there would defer and risk a stronger rebound to 112.45-50, then 112.70-75, break there would suggest the retreat from 114.37 has ended instead, bring test of 113.10-15, then towards the Kijun-Sen (now at 113.37) but break of 113.85 is needed to signal another leg of rebound from 110.24 is underway for a retest of 114.37 later. Looking ahead, only break of said resistance at 114.37 would extend the rise from 108.13 to 114.60-65 (61.8% Fibonacci retracement of 118.66-108.13), then towards resistance at 115.51 which is likely to hold from here.
