- USD / JPY extended the slide on Tuesday and fell below a short-term uptrend channel support.
- The setup favors bearish traders and supports the outlook for weakness towards 104.00.
Any attempt at a recovery move is likely to remain limited near the key psychological mark of 105.00.
USD / JPY extended its steady intraday decline and fell to two-day lows around the 104.60 / 55 region during the European session. The bearish moment dragged the pair below the lower limit of a nearly week-old ascending channel, which constituted the formation of a bearish flag pattern.
The bearish break is reinforced by the fact that the technical indicators on the hourly and day charts remain in negative territory and are still far from oversold territory. Thus, more weakness towards September lows around 104.00 now seems like a clear possibility.
Below 104.00 bearish pressures could accelerate to intermediate support at 103.50 / 45 before finally dropping below 103.00, towards March daily closing lows around the 102.35 zone.
On the other hand, any recovery attempt could now be seen as a selling opportunity and risks fading quickly near the key psychological mark of 105.00. The latter coincides with the upper end of the aforementioned trend channel, which if it is decisively cleared will nullify the bearish outlook and cause some short coverage movement.
USD / JPY hourly chart
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Credits: Forex Street
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