106 in sight as possible 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 (118.66/104.62). The breakout for this configuration is common to the downside, but an upward breakout is considered more reliable and profitable. February had price elbow a touch outside the upper boundary of the aforementioned descending triangle to 112.22, though retreated lower and produced a shooting star pattern into February’s end.

March trades lower by 2.42%, striving towards the lower boundary of the aforesaid descending triangle.

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:

Thursday’s 130-point decline, followed by Friday’s additional loss, overturned demand coming in at 105.57/106.17 (now serving supply), leading to an area of support at 104.44/105.06 entering play.

The RSI indicator entered oversold waters, the first time since August 2019.

H4 timeframe:

Friday edged south of demand at 105.64/105.89 and retested the lower edge of the area as supply heading into the close.

There’s not really much to go on to the left of price, therefore focus shifts to the possibility of buyers making a show off the daily support area at 104.44/105.06.

H1 timeframe:

Having seen US non-farm payrolls data deliver little, the H1 candles concluded the week forming what appears to be a bearish flag (105.00/105.72), while contained within a narrow range between 105.50/105.00.

105.50 breaking this week may draw 106 into view, alongside trendline support-turned resistance (107.36). In fact, the point the said structures merge (green) is an area intraday sellers perhaps have eyes for today/early week.

Structures of Interest:

Longer term:

The lower edge of the monthly descending triangle at 104.62 could encourage an unwinding of short positions. This is further strengthened on the back of the current daily support area at 104.44/105.06, and the RSI value swimming within oversold waters.

Shorter term:

H4 action has the unit fading the underside of a recently broken demand at 105.64/105.89, with H1 candles eyeing 106 for possible bearish scenarios.

Going on the above, higher-timeframe structure portends a recovery might be in order; shorter-term, though, it appears sellers want lower levels. As a result, traders considering 106 as a location for possible shorts, keep the higher timeframes in mind.