USD/JPY Candlestick Analysis: Confirmation of Direction Sought
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USD/JPY Strategy: Flat
Candle Setup, RSI Divergence Warn of Drop
Triangle Breakout Sought as Confirmation
The US Dollar continues to stall against the Japanese Yen but a bearish Dark Cloud Cover candle pattern hint a turn lower may be in the cards. Such a move would validate our expectations of a pullback in the first quarter. The outlines of a descending triangle and negative RSI divergence bolster the case for a downside scenario.
A break below Triangle floor support at 117.43 exposes the December low at 115.55, followed by the 38.2% Fibonacci retracement at 113.78. Alternatively, a move above Triangle top resistance at 119.22 targets the 23.6% Fib expansion at 120.53. We will await confirmation from the sidelines for now until the Triangle pattern resolves itself.
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Weekly Chart - Created Using FXCM Marketscope
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com