USDJPY Biased to the Downside

The descending channel starting January 3^rd, 2017 suggests that the 106 round support is a critical intercession level of the center channel trendline and price.

For USDJPY to reach out to the said level, bears need a successful break of the 106.45 support formed on October 3^rd, 2019.

We could expect a valid bearish breakout to send the pair near the intersection of the center channel trendline and the ascending trendline starting June 23^rd, 2017. This comes just shy off of the 106 level, near 105.80 (highlighted area above).

The 2-hour chart below indicates that the 106.45 support is also the 50% Fibonacci retracement of the 101.70-111.70 bullish move. This makes the support stronger which increases the chances of a short-term bounce. But we could expect the upside to be limited to the channel extremes. Otherwise, invalidate this idea.

Both the longer and shorter-term channels have a bias to the downside. So, it would be no surprise if prices slice through the 105.80 level and reach out to the 61.80% Fibonacci retracement at 105.20.

This move, however, might prove to be a valid bearish breakout. There, we could expect the center trendline of the short-term descending channel to be tested. If there is no firm test, prices will likely give in to bearish pressures.

Otherwise, we could expect 105.20 to offer a short-term opportunity to the upside at least.