16 Apr 2014
USD/JPY: Bearish factors still dominate - JPMorgan
FXStreet (Bali) - Despite the continuous bounces off 101.30/50 since the level was first tested last week, JP Morgan FX Strategists still think short term downside risks are on the rise.
Key Quotes
"The range bias continues to develop, but the short term downside risks are on the rise following the reversal from the early-April high. Importantly, this follows the failure to push above the critical 104.00/104.30 resistance zone which represents the key 76.4% retracement of the decline from the January high."
"Given that upside breaks would have suggested a higher risk for a push through the 105.50 January peak, this reversal is a clear bearish factor. Moreover, the decline from the early-April peak implies a bearish character shift with potential to allow for a deeper corrective phase."
"The critical test enters at the 101.15/100.60 support zone. This area includes the February/March range lows, the breakout area from November, the 200- day moving average and the trendline support from the June ’13 low. Given the strong confluence of levels, we would expect some pause/retracement to develop."
"The ability to rally back above the 103.00/103.50 resistance zone is necessary to put the upside bias back on track. Until then, the renewed bearish risks should prevail."
"Downside breaks would target the 99.95/98.65 zone which includes the early-November breakout area and the 76.4% retracement of the rally from the October low. Note that the medium term upside bias remains intact which keeps the door open for an eventual test, if not break of the January high."
Key Quotes
"The range bias continues to develop, but the short term downside risks are on the rise following the reversal from the early-April high. Importantly, this follows the failure to push above the critical 104.00/104.30 resistance zone which represents the key 76.4% retracement of the decline from the January high."
"Given that upside breaks would have suggested a higher risk for a push through the 105.50 January peak, this reversal is a clear bearish factor. Moreover, the decline from the early-April peak implies a bearish character shift with potential to allow for a deeper corrective phase."
"The critical test enters at the 101.15/100.60 support zone. This area includes the February/March range lows, the breakout area from November, the 200- day moving average and the trendline support from the June ’13 low. Given the strong confluence of levels, we would expect some pause/retracement to develop."
"The ability to rally back above the 103.00/103.50 resistance zone is necessary to put the upside bias back on track. Until then, the renewed bearish risks should prevail."
"Downside breaks would target the 99.95/98.65 zone which includes the early-November breakout area and the 76.4% retracement of the rally from the October low. Note that the medium term upside bias remains intact which keeps the door open for an eventual test, if not break of the January high."