Red lines- bearish channel
Blue line- bullish divergence
Green line- support (broken)
USDJPY is trading around 131.59 still inside the medium-term bearish channel. Price recently broke below the green support trend line providing a new bearish signal as expected. In our previous posts we warned that USDJPY was bouncing as part of wave 4 of wave 5 of the bigger degree. A new move lower towards 131 was our minimum expectation. Wednesday's analysis warned that the upside potential in USDJPY was limited as price was approaching the upper channel boundary resistance. A new lower low is highly probable and traders should keep an eye on the RSI to see if it provides another bullish divergence. A new higher low by the RSI would increase the chances of an imminent bottom in this down trend.
