USD/JPY 1H Chart: Channel Down

Source: Dukascopy Bank SA
© Dukascopy Bank SA
After the volatile first half of December USD/JPY seems to have calmed down and formed a narrow bearish channel. The pattern implies that the price will not rise far above 120.50, but instead will decline. Additionally, the four-hour and daily technical indicators are mostly pointing downwards. The sell-off will be expected to take a prolonged pause after the price falls down to 119.90/70, where it will meet the lower trend-line of the channel. In the meantime, the market is already overcrowded with bears (65%), and above 120.50 the rate should rise above the weekly pivot point and recover to 121.20, where the weekly R1 merges with the 200-hour SMA.
© Dukascopy Bank SA
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