105 appears vulnerable...

11 Mar 2020

USD/JPY:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

Since kicking off 2017, USD/JPY has been busy carving out a descending triangle pattern (118.66/104.62). February had price elbow a touch outside the upper boundary of the aforementioned descending triangle to 112.22, though retreated lower and produced a shooting star pattern into February’s end.

Price breached the lower edge of the descending triangle, yet recovered in strong fashion in recent trade, leaving nearby demand at 96.41/100.81 unchallenged.

Right now, March trades lower by 2.62%.

Daily timeframe:

Monday’s near-300-point decline dipped through a number of key technical supports and landed within demand fixed from 100.68/101.85 (an area glued to the top edge of monthly demand underscored above at 96.41/100.81).

Recent technical developments saw Tuesday chalk up a sizable counterattack, reclaiming all of Monday’s losses and retesting demand-turned supply at 105.57/106.17, along with joining 38.2% Fib retracement at 105.39.

H4 timeframe:

Tuesday tested supply at 105.75/105.17, initially holding price to lows at 103.22 before marginally clipping the top edge of its area, registering highs at 105.91. Although unlikely enough to have cleared all sellers from the zone, it is worth noting supply seen at 108.15/107.64, in the event we push for higher ground.

H1 timeframe:

Demand for safe-haven assets diminished on Tuesday, with USD/JPY witnessing a robust recovery off multi-year lows.

105 proved stubborn resistance in recent trading, forcing a whipsaw through 104 to channel resistance-turned support (107.38). 105 was later breached, with the pair coming within touching distance of 106, before retreating back to 105.

Of interest, a combination of a 127.2% Fib ext. point at 106.26 and a 78.6% Fib retracement at 106.34, along with trendline resistance (108.53), is seen loitering a few points above 106.

With respect to the RSI, the indicator is seen printing mild bearish divergence.

Structures of Interest:

Daily price fading a demand-turned supply zone at 105.57/106.17, as well as H4 price holding at supply from 105.75/105.17, could guide H1 candles beneath 105 today for a run towards 104.

An alternative to this, of course, is a retest of 106, albeit likely enticing a modest fakeout through the number to draw in additional sellers off the Fib combination highlighted above around 106.34/106.26.