USD/JPY technical analysis: Remains vulnerable, bears likely to target levels below 107.00 handle
- The USD/JPY pair finally broke down of its recent consolidative trading range, held over the past one week or so and tumbled to its lowest level since the early-Jan. flash crash.
- Bulls, however, showed some resilience near 61.8% Fibonacci retracement level of the 104.69-112.40 up-move, which should now act as a key trigger point for bearish traders.
Looking at a slightly bigger picture, the pair has been trending lower along a short-term descending trend-channel from yearly tops - set on April 24, clearly indicating a well-established near-term bearish trend and supporting prospects for further declines.
However, oversold conditions seemed to be the only factor holding investors from placing any fresh bearish bets and might now lead to near-term consolidation or a modest rebound though might still be seen as a selling opportunity near the 108.00 handle.
A convincing break through the mentioned support will reinforce the bearish bias and turn the pair vulnerable to weaken farther below the 107.00 handle and aim towards challenging the trend-channel support, currently near the 106.70 region.
Having said that, a sustained recovery beyond the 108.50-70 supply zone - marking 50% Fibo. level and also nearing the descending trend-channel hurdle, might negate the bearish outlook and prompt some aggressive short-covering move in the near-term.
USD/JPY daily chart