FxWirePro: USD/JPY downtrend loses steam but outlook still bearish

The USD/JPY pair sunk sharply towards lower levels on Thursday, hitting as low as 110.90, its sharpest decline since 2008 as sharp decline in US and European stocks pushed investors towards safe heaven Japanese yen.

• Further upside is expected to be limited as the pair finds strong resistance at 113.20 which should limit upside and bring a decline towards lower levels.
   
• Technically the pair has extended its decline below its 21 DMA, the RSI in the 4 hour chart is indicating downwards at 30, meanwhile the 55, 30 and 20 MA's are pointing strong bearish momentum towards lower side. Overall the technical indicators are depicting further downtrend for this pair.
   
• To the upside, the strong resistance can be seen at 113.20, a break above this level would take the pair towards next resistance level at 113.79.
   
• To the downside immediate support can be seen at 111.40, a break below this level will open the door towards next level at 110.95.

   

  Recommendation: Go short around 113.00, targets 112.00, 111.50, SL 114.00.

  Resistance Levels
  
  R1: 112.57 (50% Retracement Level)

  R2: 113.20 (Daily high)

  R3: 113.79 (61.8% Retracement Level)

  Support Levels

  S1: 111.40 (38.2% Retracement Level)

  S2: 110.95 (Daily lows)

  S3:110.00 (23.6% Retracement Level)