- Data released early today showed Japan Nikkei Manufacturing PMI registered at 52.6, below expectations (53.4) in September.
- USD/JPY edged higher, recovering from the risk-off sell-off seen last week, hit session highs at 112.52.
- Upside however, capped shy of major trendline resistance at 112.90, we see upside only on breakout above.
- The pair has formed an inverted hammer and finds immediate support at 5-DMA (112.09).
- Break below 5-DMA finds next major support at daily cloud at 111.60, we see major weakness on break below.
- The pair has completed a 'Bearish Cypher' pattern which adds scope for downside. Break below 111.60 is likely to see test of 50-DMA at 110.34.
Support levels - 112.09 (5-DMA), 111.60 (cloud top), 111, 110.34 (50-DMA)
Resistance levels - 112.90 (trendline), 112.95 (78.6% Fib retracement of 114.495 to 107.318 fall), 113, 114.36 (double top)
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