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USD/JPY Approaching Key Support Factors

Since making a high on the year, the USD/JPY has been sliding in what appeared to be a falling wedge in the 4H chart. The bearish correction is taking another phase as price now trades under the 200-, 100-, and 50-period simple moving averages in the 4H Chart, and as price action dips below the projected wedge support. The RSI is also falling below 30, showing bearish momentum in this time-frame.

USD/JPY 4H CHart 7/8

(click to enlarge)

At this point, if price can rally back above 123, then we can start considering a bullish outlook. Otherwise, the market has only bearish signs in the 4H chart. 

On the daily chart, we might look to anticipate support as price falls towards 121.

USD/JPY Daily Chart 7/8

(click to enlarge)

The daily chart shows that the market has loss its prevailing bullish momentum as the RSI falls below 40. Price is falling below the 50- and 100-day SMAs, which reflects loss of the bullish bias. We might say hat the market has shifted from a bullish mode to a neutral one, or at most a neutral-bullish one. 

Around 120.50, USD/JPY would be challenged by a rising speedline and a previous resistance pivot area. We might allow some elbow space to 120, but a break below 120 would make this market neutral, and not neutral-bullish. There might even be expectations of a bearish outlook towards the 118.30, common low from earlier in the year, and where the 200-day SMA resides. 

Now let's say we do find support in the 120-121 area. Don't be so sure of a bullish continuation outlook yet. As noted before, we need to see at least a recapture of the 123 handle before considering that possibility. 

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