USDJPY is consolidating after strong recovery rally on Mon/Tue; near-term bias remains with bulls
The pair eases on Wednesday after strong rally of nearly 2% in past two days peaked at 110.25. Near-term bulls are taking a breather.
Extended short squeeze is threatening larger bears for stronger recovery which requires firm break above lower top of 31 Aug at 110.66.
Strong bullish signal was generated on Tuesday’s close above 110.05 (Fibo 38.2% of larger 114.94/107.31 descend, with 110.00 zone now acting as initial support and so far holding easing from fresh two-week high at 110.25.
Correction may extend as overbought slow stochastic on daily chart sends negative signal. Extended pullback should find support at 109.38 (converged 10/20SMA’s) to keep near-term bulls intact for renewed attempts higher.
Conversely, sustained break below 109.38 would generate negative signal.
Res: 110.25; 110.66; 110.80; 111.14
Sup: 109.90; 109.62; 109.38; 109.00