- USD/JPY recovery capped below 200-DMA at 111.70, we see scope for further upside only on break above.
- Price action hovers around weekly 20-SMA at 111.38, decisive break below raises scope for more slumps.
- The major has been beaten down below 200-DMA on the dovish FOMC minutes and poor data.
- Price action is currently extending consolidation, momentum studies still bearish.
- The RSI gaining traction downwards around 35, suggesting more weakness.
- Break below 111 will see resumption of downside, scope then for test of 61.8% Fib at 110.15.
- On the flipside, retrace above 200-DMA could invalidate our bearish bias.
Support levels - 111.38 (weekly 20-SMA), 111.02 (50% Fib retrace of 107.318 to 114.73 rally), 110.61 (July 24 low), 110.20 (100W-SMA), 110.15 (61.8% Fib)
Resistance levels - 111.54 (5-DMA), 111.70 (200-DMA), 112.11 (weekly 200-SMA)
Recommendation: Good to stay short below 111, SL: 111.75, TP: 110.60/ 110.30/ 110.15
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