USDJPY has most probably completed the upward move that started at 93.79 and ended at 101.53. Yesterday prices broke out of the upward sloping trend channel and plummeted as low as the 38% Fibonacci retracement. We believe that at least a short term correction has started with the 97 level as target. The downward move looks and despite the upward bounce that may follow yesterday’s sell off, we expect the downward move to continue as we feel the correction is not over.
The first break down reached the 38% Fibonacci retracement with 98.22 low. Prices bounced upwards towards 99.63 and I believe that the bounce could very well be over. Short term trend has changed to down and prices are trading within a downward sloping channel. Trend will change to up only if USDJPY manages to break above the blue trend line as shown in the chart below.
We expect selling pressures to continue for this pair and for prices to fall further towards 97-96.50. We are bearish as long as prices trade below 100.70 price level.
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