FX.co ★ Technical analysis of USD/JPY for January 3, 2017

The USD/JPY is trading right below the 118 level where the last time we saw a rejection and a pullback towards 116. The pullback is not over and price is more likely to reverse and move towards 114-112 than 120. The important level to watch out for is at 117.20-117.

Red line - resistance

Green line - support

Short-term support and a reversal level is at 117.20-117. A break below that level will confirm that an important high is placed at 118.50 and a pullback towards 114 at least should be expected. I remain bearish about USD/JPY looking for a push below 116.

Overbought with divergence signs by the oscillators, USDJPY bulls should be very cautious. A pullback towards the daily cloud support and the 38% Fibonacci retracement is justified and highly probable.