The USD/JPY pair declined on Tuesday as demand for the US dollar remained same. The US dollar index fell below 96.50 yesterday.
The US dollar depreciated sharply against the Japanese yen on Friday and fell below the support level of 107, forming a strong bullish candle and testing at 106.68. 106.68 is a 161.8% Fibonacci extension point that joins the Quasimodo support 106.66 and forms an AB = CD (black arrows) correction.
AB=CD traders seem to target 38.2% Fibonacci retracement 107.22. The second take profit target is 61.8% Fibonacci retracement ratio (107.57).
The 38.2% Fibonacci retracement ratio of 107.22 in the four hour time frame is currently under pressure due to yesterday’s price increase. The next target is 61.8% Fibonacci retracement ratio from 107.57.
In the weekly time frame, the price is currently below the opening level of 2020 108.62. Low of May 7th 105.98 will act as support and below there is another support 104.70. Technically in the daily time frame, all eyes are still on Quasimodo support 106.35 and 200-day SMA (orange – 108.36).
In the four-hour time frame, AB=CD traders want to reduce the risk and make some profit from 107.22, and if the buying increases the price is expected to go up to 61.8% Fibonacci retracement ratio from 107.57. Price may be tested at May’s opening level 107.12 before moving to the upper level.