Looking at the technical picture of USDJPY on our daily chart, we can see that, overall, the pair is still trading above a medium-term upside support line drawn from the low of March 24th. Lately, the rate has been seen distancing itself from that line. That said, from around the end of October, USDJPY has been noticed trading in a short-term range, which is roughly between the 148.80 and 151.72 levels. At the time of writing the pair is breaking below the lower bound of that range, signaling a potential correction lower.
If we look out our short-term outlook, we will see that there is a possibility for a larger correction lower, especially if the rate stays below the lower side of that range for a while. This might clear the path towards the 147.30 zone, or the previously discussed upside line. If that line remains intact, this may attract the bulls back into the field, as they could take advantage of the lower rate. USDJPY might once again accelerate to the 148.80 hurdle, or the 151.72 area, which is near the upper side of the short-term range.
Alternatively, a break of the medium-term trendline could result in further declines, as such a move might spook the bulls from entering the field for a while, due to a possible change of the trend. USDJPY may end up sliding to the 144.54 obstacle, or even the 141.55 level. That level marks the lowest point of August.
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