USDJPY Weekly Technical Outlook
I am still maintaining a bearish perspective on this pair. Although we may have a northward retracement, the technicals on the monthly and weekly time frames are in support of a southward disposition in the short to medium term.
On the monthly time frame, the candlesticks printed in January and February 2018 were primarily bearish. Price action moved a bit southward from a zone, the 108.436/110.660 area, that has acted as support and resistance for a while in the past. But this move lacks a follow through. In fact, there has been a northward pullback since the beginning of April 2018; which is likely to be reassuring to bulls. However, at the moment the pullbback is only around the 23.6 Fib zone of the downward swing from the high of November 2017 to the low of March 2018 and it seems to be a retest of the support that was just traversed southward in the 108.436/110.660 area. This area is in confluence with the 38.2/50 Fib zone. Thus, we may likely see a pullback further northward to that area (bound by magenta coloured lines) for a possible role flip before a southward turnaround. Two ascending trendlines (red) from the low of September 2012 should be watched as they are currently providing a channel for price action.
Price action on the weekly time frame is around a minor resistance in the 107.460 area but is heading to a former major support zone (bound by magenta coloured lines), i.e the 108.436/110.660 area, perhaps being flipped as resistance and there are other barriers ahead. A trendline (red) seen on the monthly time frame may act as resistance. A descending trendline (navy) from the high of November 2017 is still in play and may be a further hindrance to a northward move. Generally, although a northward correction is currently the sentiment, the technicals on the weekly time frame are disposed southward.
On the H4 time frame, price action is operating in an ascending channel, which is technically a corrective phase of a longer southward trend on the H4 time frame. The 38.2 Fib zone of the recent downward swing on the weekly time frame is about 100 pips above current location of price action and this may be attractive to bulls. In fact, the area is close to the base of the immediate S/R area, around 108.430; an area which price action recently traversed southward and which is open to a retest in order to flip the zone as resistance. Should bulls take price action northward and to that area, a turnaround from there will likely be an impetus for a southward momentum. That northward pullback is likely to give me the entry for a sell trade.
I may be wrong. Trade safe and prosper.