In light of recent price action, the pair USD / JPY could now attempt a breakthrough above the 114.00 level In the next weeks.
24 hour view: “We highlighted yesterday that ‘the upside momentum is starting to show possible signs of slowing down.’ We added: ‘This, coupled with the still overbought conditions, suggests that USD / JPY is unlikely to strengthen much further’ and we expected the USD / JPY ‘will trade between 113.15 and 113.80’. Our opinion was not wrong even though USD / JPY moved within a slightly narrower range than expected (113.21 / 113.80). Price action is considered part of a consolidation. In other words, we continue to expect USD / JPY to move sideways, albeit in a lower range of 113.10 / 113.75. “
Next 1-3 weeks: “On Tuesday (Oct 12, USD / JPY at 113.40), we highlighted that the impulsive rise suggests that further strength in USD / JPY would not be surprising and that the next resistance is at 114.20. There is no change in our opinion for now even though overbought short-term conditions could lead to a couple of days of consolidation first. USD / JPY strength is considered intact as long as it doesn’t break below 112.80 (‘strong support’ level was at 112.65 yesterday) “.