USDJPY: resistance capped - sharp fall

Retracement resistance at 108.90/00 has capped to avoid a base to see a sharp fall, with support next at 107.60/50 USDJPY failed to clear key resistance from the 38.2% retracement of the fall from April at 108.93, avoiding a small ‘head and shoulders’ base to see a sharp turn lower within the recent range. Support moves to 107.74/71 initially, ahead of better support at 107.60/50, which we ideally look to hold above to maintain the upside pressure within the range. Thereafter, immediate resistance moves to 108.14 then 108.48. Above can see a move back to 108.90/00, which remains a crucial barrier. Above here would suggest scope for the 55-day average at 109.08 where we would expect to see renewed selling initially.

A clear break below 107.60/50 remains needed to confirm the recovery effort is over, with potential uptrend from January then seen at 106.97. Below would clear the way for a move back to retest the current low and "neckline" to the early 2018 base at 106.78/69, where we would expect to see renewed buying.