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 – 110.66
As dollar’s retreat from 112.13 has kept price under pressure, suggesting downside risk remains for a retest of previous support at 110.24, however, a break below there is needed to retain bearishness and confirm early decline from 114.37 has resumed and extend weakness to 110.00, then towards 109.59 support, having said that, loss of downward momentum should prevent sharp fall below minor support at 108.88 and price should stay well above recent low at 108.13, bring another rebound later.
On the upside, whilst recovery back to 111.00 and then 111.20-25 cannot be ruled out, reckon 111.45-50 would cap upside and bring another decline later to aforesaid downside targets. Above 111.95 would abort and bring another test of 112.13 resistance, break there would bring a stronger rebound to 112.45-50 (61.8% Fibonacci retracement of 113.85-110.24) and possibly towards 113.10-15 but upside should be limited to 113.85 and price should falter well below indicated resistance at 114.37.
Recommendation : Stand aside for this week
On the weekly chart, after trading narrowly last week (a doji was formed), this week’s retreat suggests downside risk remains for the fall from 114.37 to extend weakness to 110.24, below there would bring further decline to 109.59 support, however, a weekly close below there is needed to add credence to our view that the rebound from 108.13 has ended, bring subsequent weakness to 108.85-90 but said support at 108.13 should remain intact. 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 111.20 and 111.45-50 should hold, bring another decliner. Above previous resistance at 112.13 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 113.40) 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.
