• Last Candlesticks pattern: Hanging man
• Time of formation: 22 May 2016
• Trend bias: Down
• Last Candlesticks pattern: Shooting star
• Time of formation: 15 Feb 2017
• Trend bias: Down
USD/JPY – 112.77
Last week’s selloff dampened our previous bullishness and suggests the corrective bounce from 111.59 has possibly ended at 115.51 earlier this month, hence consolidation with mild downside bias is seen for further weakness to 112.00-10 would be seen, however, break of indicated support at 111.59-69 is needed to confirm early decline has finally resumed and extend fall to 111.00 but near term oversold condition should limit downside to 110.50 and reckon downside would be limited to 110.00, risk from there is seen for a rebound to take place later.
On the upside, whilst initial recovery to 113.00 cannot be ruled out, reckon upside would be limited to resistance at 113.54, bring another decline later. Only break of previous support at 114.48 would abort and signal low is formed, instead and prolong choppy trading, risk rebound d to 114.90-00 but price should falter well below said resistance at 115.51, bring retreat later. Only a break of said resistance at 115.51 would revive near term bullishness and signal the erratic rise from 111.59 is still in progress for further gain to 116.00, then 116.85-90.
Recommendation : Turn short at 113.50 for 111.50 with stop above 114.50.
On the weekly chart, last week’s retreat formed a black candlestick and suggests the rebound from 111.59 has possibly ended at 115.51, hence consolidation with downside bias is seen for further fall to 112.00, however, break of indicated support at 111.59-69 is needed to signal the fall from 118.66 top is still in progress for retracement of early upmove to support at 111.36, then towards 110.90-95 (50% Fibonacci retracement of 101.19-118.66) but reckon downside would be limited to 110.00 and the Kijun-Sen (now at 109.38) should hold, bring another rebound later.
On the upside, whilst recovery to 113.00 and possibly the Tenkan-Sen (now at 113.55) cannot be ruled out, reckon 114.48 (previous support) would hold and bring another decline later. Above there would bring rebound to 115.20 but only break of 115.51-62 resistance would revive bullishness and extend the rebound from 111.59 to 116.40-50, break there would signal the pullback from 118.66 has ended at 111.59, bring subsequent rise to 116.87.