Looking at the last two week’s bull run the USDJPY pair seems to have found a resistance at the 114.000 zone where traders would presumably take profits given the 2.4% incline since the beginning of September. As US bond yields faced a slight correction from their near yearly highs from 3.113% to 3.052% during the last days of September and given the fact that there are no major economic data from Asia, the Japanese Yen may appear as a modestly attractive low risk option. If a retracement occurs, it would be logical to assume that the 113.335 level, indicating horizontal support seen on the 4 hourly chart, could be tested and furthermore if breached the 113.000 level could follow suit. Looking at the daily chart, a bearish butterfly pattern could be observed combined with a strongly overbought Stochastic RSI reinforce a scenario of consolidation that could potentially reach the 12.600 zone. As momentum shows a decline, the strong 114.000 resistance level appears hard to break however could potentially be retested during this week if support was to be found near the first profit taking target marked at 113.332, assuming a short position. The second target would be placed at the 13.000 round figure zone. At the moment, the market sentiment is dominantly short given that the ratio of short to long positions is marked at 1.87 to 1, with more traders joining the bears as since last week an increase of 33% in short positions has been observed.
