USD/JPY 4H Chart: Channel Down

Although the general trend of the US Dollar is biased to the downside, this currency is now recovering against the Japanese Yen within the channel down pattern. We are expecting the rally to extend beyond 111 and stop at 111.32 where the cross is going to meet the red boundary of the channel. It is guarded by the monthly R1 from the upside, meaning the likelihood of another leg down is rather high. On top of that, technical indicators on the medium-term time frame are pointing down right now, while the SWFX market, which is overcrowded with the bulls (74%), is going to provide some support to the bearish camp. However, in case 111.32 is breached, USD/JPY will begin targeting 114.54.