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Fan Yang

USD/JPY at a Support Pivot; Bearish Anticipation

The US Dollar took a beating in December. I thought it was trying to break above that 114.50 resistance. Instead, USD/JPY failed to clear it and retreated immediately after price cracked this resistance. It was a false bullish breakout. This suggests a bearish period for $USDJPY.

USD/JPY Dailyu Chart

(click to enlarge)

Support at 112:
- The daily chart shows the subsequent dip to 111. 
- USD/JPY found buyers and and rebounded, but failed to reach back to 114.50. Instead, it found resistance just above 113.50. 
- Since December, USD/JPY also established support at 112, and price is now falling towards this level.
- I don't think we should rely on support to hold, especially after price failed to get back to 114.50. 
Bearish Scenario:
- I wouldn't be surprised by a rebound to 113, but if the market is still bearish, there should be resistance there.
- In the bearish scenario, I think price will test the 111 support, and if that breaks, USD/JPY will push to the 108-108.20 range support.

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