Societe Generale FX Technical Strategy Research notes that USD/JPY has reached the median of a multi month descending channel at 113/113.30, also the 50% retracement from last year highs, but the formation of a daily shooting star near those levels suggests a possibility of a retracement.
"With daily RSI hitting a similar trend resistance, 113/113.30 will be a near term hurdle.
A pullback looks plausible towards 112 with next objective at 111/110.70, the 38.2% retracement of the recent up move.
However this is expected to be a limited down move and eventually a break above 113/113.30 will lead to an extended recovery towards 113.80 and perhaps even towards the triangle upper bound at 115.50/116 which will be a key resistance," SocGen argues.
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