FX.co ★ USDJPY challenges major support

We have been bearish since mid October in USDJPY since it was trading around 105.50. Since then price got rejected and fell around 100 pips towards support area of 104.50-104.30. So far price has bounced twice from this support level. The next couple of sessions are very important for the short-term trend at least.

Green line - support

As long as price is below the red downward sloping resistance trend line we remain bearish. If support at 104.30-104.50 fails to hold we should expect USDJPY to challenge 102.50-102 lows. The descending triangle pattern with the lower highs is a weakness sign. However for more downside to be achieved, price should not form higher lows in the RSI, as this is a sign of weak selling. Despite making lower lows USDJPY bears need to break through the support decisively. A daily close below 104.25 and staying below this level will be the key for a move towards 102. If support holds, we should expect price to bounce towards 105-105.35.