The USDJPY currency pair, on the D1 time frame was in an uptrend until June 5 when a higher top was reached at 109.848. Supply overwhelmed demand and the market started declining.
After the higher top at 109.848, the price broke through the 15 and 34 Simple Moving Averages and the Momentum Oscillator crossed the zero baseline into negative terrain. The downward momentum was confirmed with strong bearish candles that occurred during the break of the Moving Averages.
A possible critical support level formed when a bottom was recorded on June 11 at 106.569. Buyers tried to drive the price higher but could not maintain the upward momentum and a lower top formed on June 16 at 107.637.
If the USDJPY breaks through the critical support level at 106.569, then three possible price targets may be calculated from there. Applying the Fibonacci tool to the bottom of the support level at 106.569 and dragging it to the top of the resistance level at 107.637, the following targets might be considered. The first target could be projected at 105.909 (161 %). The second price target might be considered at 104.841 (261.8%) and the third and final target may be expected at 103.113 (423.6%).
If the 107.637 resistance level is broken, the possible scenario above are invalidated and will need to be re-evaluated.
As long as sellers maintain a negative sentiment and supply overcomes demand, the outlook for the USDJPY currency pair on the Daily time-frame will remain bearish.
