Potential for intraday recovery off AB=CD completion

USD/JPY:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

Since kicking off 2017, USD/JPY has been busy carving out a descending triangle pattern. The breakout for this configuration is common to the downside, but an upward breakout is considered more reliable and profitable. In recent movement, price elbowed a touch outside the upper boundary of the aforementioned descending triangle to 112.22, and is now seen retreating lower.

Outside of the current pattern, a supply area is visible at 126.10/122.66, while lower on the curve we have a demand area at 96.41/100.81.

Currently, the pair trades +1.04% on the month.

Daily timeframe:

Partially altered outlook from previous analysis –

The combination of a channel resistance from 108.47 and supply at 112.66/112.08 held price action lower at the tail end of the week. Follow-through selling has been seen this week, stretching to, and marginally engulfing, demand at 109.52/109.99. Channel support (104.44) could make an entry in the event additional selling materialises, shadowed by the 200-day SMA.

The RSI indicator also voyaged through the 50.0 value yesterday, down from last week’s peak at 76.63.

H4 timeframe:

Thursday’s analysis highlighted the possibility of trendline support-turned resistance (108.31) holding firm and pressuring price action through supply-turned demand at 110.02/110.23 to demand plotted at 109.30/109.53. As evident from the chart this morning, price is seen testing demand at 109.30/109.53, with further downside revealing demand at 108.41/108.70.

H1 timeframe:

Broad-based USD selling, weighed by soft US Treasury yields, sent USD/JPY through 110 to a session low at 109.32 Thursday, erasing more than 80 points, or 0.76%.

Technically, the H1 candles trade at an area of potential support, comprised of an AB=CD correction (orange) at 109.43, 109.50 support, channel support (109.89), RSI oversold and a 161.8% Fibonacci ext. point at 109.19. Beyond here, limited support exists until reaching 109.

Direction:

While daily demand at 109.52/109.99 recently had its lower edge ruptured, and monthly price is fading structure, H4 price trades from demand at 109.30/109.53, bolstering the H1 support area between 109.19/109.50. With that being the case, a intraday recovery from H1 support could transpire today, targeting at least 110, maybe even channel resistance from 111.04.