USDJPY pulls back from two-week high, potential formation of bull-trap

USDJPY pulls back from new three-week high on Friday, as traders started to collect profits from the steep rally that lasted nearly two weeks.

Overbought daily stochastic, stretched 14-d momentum, south- turned RSI and persisting talks about another intervention (readiness of Japanese authorities to intervene again as well as President Trump’s concerns over weak yen, expressed in meeting with Jpanese PM) contributed to the latest move, after the rally was capped by the base of thinning daily cloud and 55DMA.

Initial reversal signal is developing on daily chart as fresh weakness pressures first Fibo support at 157.58 (23.6% of 152.88/159.03), with more work at the downside still being required to validate the signal.

Also, fresh weakness signaled a false break of Fibo barrier at 158.62 (76.4% retracement of 160.39/152.88 descend) which may result in formation of bull-trap and add to negative signals.

Daily close below 157.58 is seen as minimum requirement to keep fresh bears in play for deeper pullback towards 156.80/70 zone (10DMA / Fibo 38.2%).

Res: 158.05; 158.45; 158.86; 159.03
Sup: 157.58; 157.35; 156.68; 155.96