USD/JPY Is Preparing For A Depreciation

USD/JPY was undecided when the market closed at the end of the week, forming a doji on the W1 time frame right under the resistance at 113.50.

Тhe bar on the D1 time frame is much more expressive and telling – it is a strong bearish hammer bar (which is essentially a bearish pin bar) which ignores all hopes for the continuation of the move to the upside.

I think that next week we will see the pair depreciate. That is also confirmed by the RSI divergence between the three highs on the D1 time frame. The first support to the downside is around 112.00 – 111.80. If the pair breaks out below it, I think we can expect a drop to 111.00 – 110.80.

The RSI divergence on the D1 time frame also points to a drop to that level. I think that if the pair falls below it we could see it depreciate much lower, even test the last local low around 107.50 – 107.30.