USD/JPY technical analysis: Bearish bias remains, oversold conditions warrant some caution
- The USD/JPY pair remained under some selling pressure on Tuesday and dropped to fresh multi-month lows during the Asian session, albeit recovered few pips thereafter.
- Oversold conditions on the daily chart seemed to be the only factor lending some support, though the uptick lacked any strong follow-through beyond the 107.00 handle.
Looking at the technical 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 bearish trend and support prospects for an extension of the depreciating move.
Adding to this, the fact that the pair has found acceptance below 61.8% Fibonacci retracement level of the 104.69-112.40 up-move, and a subsequent weakness below the 107.00 round figure mark further add credence to the near-term negative outlook.
Hence, a follow-through selling pressure has the potential to continue dragging the pair further towards challenging a support marked by the lower end of the trend-channel, currently near the 106.40-35 region, though oversold conditions warrant some caution.
On the flip side, any attempted recovery move might now confront some fresh supply near the 107.65 region (61.8% Fibo.) ahead of the 108.00 round figure mark. Momentum beyond the mentioned barrier could get extended but seems more likely to remain capped near the 108.50 confluence hurdle - comprising of trend-channel resistance and 50% Fibo. level.
USD/JPY daily chart