FxWirePro: USD/JPY extends weakness for 3rd straight session, eyes 50-DMA at 111.53, stay short

USD/JPY chart on Trading View used for analysis

• USD/JPY trades in the red for the 3rd consecutive session, bias lower.
   
• S&P 500 futures have dropped well below the key support of the 50-week EMA, emboldening the bears.
   
• The pair has retraced dip below 112 handle and is currently trading at 112.15 after hitting session lows at 111.82.
   
• The combination of market risk in equities, political risk in Europe (Brexit and Italy)  and economic risk around the globe will keep safe havens in demand.
   
• Focus now on the forthcoming Bank of Japan (BoJ) policy meeting scheduled for October 31.
   
• Also, U.S. Q3 GDP data due later this week will be watched for clues on further direction.
   
• Price has broken below 23.6% Fib. We see scope for test of 50-DMA at 111.53 ahead of daily cloud. Violation at daily cloud will see further bearishness. 
   
• On the upside, 20-DMA is major resistance. We see bearish invalidation on break above.

Support levels - 112 (major trendline support), 111.53 (50-DMA) 

Resistance levels - 112.20 (23.6% Fib), 112.85 (20-DMA), 113.17 (July 19 high)

Recommendation: Good to stay short on upticks, SL: 112.90, TP: 111.55/ 111

For details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex.