Note:All indicators for the overall outlook and forecast of USD/JPY are based on the daily forex charts and in some cases 4-hourly or weekly charts and is updated during the weekends.
" (2 weeks back) We, initially, expect some more downward consolidation. On the downside we expect the first level support near the last week's low of 97.56. In case USD/JPY fails that support then the next level support should come near the 22-day EMA i.e. near 96.82. In case there is a break below 96.82 then a very strong support is expected near 96.28 i.e. the Kijun line support of daily Ichimoku cloud.”
US Dollar - Japanese Yen (USD/JPY) had recovered quite strongly from 95.80 and then had move as high as 99.88 but the pair failed below 100.00 again and after dropping to 97.56 the weekly closing was at 98.04.
As we had mentioned during the last outlook update, after being in a strong downtrend for so long and going as low as 75.36, 100.00 becomes a very strong psychological resistance and that's what we have been witnessing for past 3 weeks. The first time the currency pair had gone as high as 99.94 and the second time to 99.88 and both time it failed miserably to make the century. The two failed attempts also seem to be bringing in a double-top chart formation into the picture and though the theoretical neck level of this double-top pattern is 95.80 but the practical neck line can be considered as 97.42 (explained in the chart alert mentioned below).
Though for past 5 months the 5-Week EMA has been the main support level and the current price is again that level (please check this USD/JPY chart alert) but with the above mentioned observations our immediate outlook is for some more downward consolidation for USD/JPY. With any decisive break below 97.40, we would expect further fall towards the 55-day EMA support which is currently at 96.61 and any break below that may take the currency pair to test the recent 95.80 or even 95.75. The uptrend combined with the psychological support of 95.00 level should come as a very strong support near 95.75/95.80 and with this support the pair should make another attempt for 100.00.
Please note that a test of 100.00 will come sooner or later after the pair managed to come so close to it. On the upside a decisive break over 100.00 should bring further gains towards the resistance zone of 100.60/100.80. Any decisive break over 100.80 should target 103.00 first and then probably 104.10/104.20 strong resistance zone as the pressure of the next psychological level of 105.00 will start coming into picture here.
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