The US dollar versus the Japanese yen currency pair seems to have been taken over by the bears, as the price slipped beneath the 107.00 psychological level. Do the bulls still have any chances?
The fall from the 109.85 high went thru the intermediary level of 108.05 but got halted by the firm 107.00 support area. The bulls seized the opportunity and confirmed the level as support, but to no avail, as the bears turned the market around, piercing 107.00 and extending the bullish losses until the 106.07 low.
The strong rejection that took place at the 106.12 level, thus confirming the 106.12 intermediary level as support, favored the bulls by allowing them to reconquer 107.00 and also stretch their gains to the 108.05 level. At that point, one could think that an inverted head and shoulders chart pattern is in place. Nevertheless, as the bears once more caught the bulls by surprise, yet again sending the price beneath 107.00, the pattern is now invalidated.
So, in the current context, the first scenario that could materialize is the one in which 107.00 gets confirmed as resistance, an unfolding that will allow the bears to further drive the price to their initial target, 106.12. Of course, the simple continuation of the decline, maybe paused by a short-term consolidation phase, is also a possibility.
On the other hand, if the bulls do manage to regain their strength and push the price back above 107.00, then they could aim for 108.52. However, even if this happens, given the recent history, where the bears demonstrated their abilities, any bullish victory remains unsure in the long run.
The appreciation that started from the 106.07 low ended at the 108.16 high after the price pierced the trendline. Following was a consolidation phase that stood on the 107.34 intermediary support level until it got breached.
After some very limited oscillations took place just below 107.34, the price gave way under the intense bearish pressure. As the price almost reached the 106.77 intermediary level, it is possible to see the bulls attempting a comeback — even if for a brief period — around this area. But as long as 107.34 stands as resistance, the price is in bearish territory.
If 106.77 allows further decline, then the price could continue towards the strong 106.02 support level.
Levels to keep an eye on:
D1: 107.00 106.12 108.52
H4: 106.77 107.34 106.02
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