USD/JPY eyeing 108 as resistance?

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 retreated lower, forming a shooting star pattern into February’s end.

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.

Daily timeframe:

Partially altered outlook from previous analysis –

The 200-day SMA, currently circulating around 108.37, remains in position to offer further resistance on this timeframe, along with channel support-turned resistance (104.44) and demand-turned supply at 109.52/109.99.

Tuesday’s 120-point downside move drew the market into the jaws of demand coming in at 106.60/107.09, which witnessed a minor breach in October 2019. Demand at 105.57/106.17, albeit not the prettiest of areas given the lack of momentum drawn from the base, is next in line should we push lower.

The RSI indicator is seen bottoming just ahead of oversold values.

H4 timeframe:

Demand at 106.94/107.30, in recent trade, came under pressure and had its lower boundary engulfed. While this may trigger further downside, with the next layer of demand not stepping in until 105.64/105.89, traders are urged to pencil in the possibility of an approach forming to a familiar demand-turned supply zone at 108.41/108.70.

H1 timeframe:

Following Fed-induced loss Tuesday, early hours Wednesday refreshed multi-month lows at 106.84, shaped by way of a hammer candlestick pattern that pierced 107 into demand at 106.77/106.94. In recent movement we conquered 107.50 to the upside and are poised to retest the level as support.

Upside from here has 108 in sight, bolstered by the 100-period SMA and a 127.2% Fibonacci ext. point at 107.91.

Structures of Interest:

Holding off 107.50 this morning could lead to 108 re-entering the fight. The 108 handle may offer resistance today, knowing it brings 127.2% Fibonacci confluence and the 100-period SMA to the table. In addition, monthly price suggests further selling, as does H4 price after nudging through sell-stop liquidity beyond demand at 106.94/107.30. Despite this, though, downside could still be capped off daily demand at 106.60/107.09.