USDJPY Outlook: Bulls Show Strong Hesitation at 112.37 Fibo Barrier, Keeping in Play Risk of Top Formation

Technical analysis of Forex market

Wednesday’s action remains directionless for now and shaped in Doji candle, as bulls show hesitation after strong rally on Tuesday. Conflicting daily studies (overbought slow stochastic in sideways mode and strengthening momentum) provide no clear direction signal, as US action and China’s reaction on trade conflict add to market’s current indecision. Fibo barrier at 112.37 (76.4% of 113.17/109.77 descend) proves to be stronger than anticipated as it capped Tuesday’s rally and today’s probes above were so far marginal. As mentioned in yesterday’s comment, risk of top formation exists, despite it was sidelined by Tuesday’s bullish acceleration. Today’s close will be watched for initial signals, as repeated close below 112.37 would suggest a breather in recent rally. Dips are expected to find ground at 111.87/61 zone (broken Fibo 61.8% of 113.17/109.77 descend / rising 10SMA) to keep bulls in play for possible extension towards key barriers at 113.17/24 (19 July high / weekly 200SMA). Conversely, break below these supports would risk deeper correction and put bulls on hold.

Res: 112.44; 112.62; 112.92; 113.17
Sup: 112.17; 111.87; 111.61; 111.42