A medium-term top has completed on USDJPY turning the core trend bearish, according to David Sneddon and his team at Credit Suisse.
Sneddon says the continued sell-off yesterday took USDJPY below a cluster of pivotal supports to form a medium-term top. These support levels, between 111.73 and 112.16, comprise the series of lows from November 2016 to February 2017 and the 38.2% retracement of the June to December 2016 rally (see Chart).
Sneddon expects further weakness to test the 50% retracement of the June to December rally at 108.84 initially, but thinks an overshoot to the 200-day moving average at 108.18 is likely, where it is expected to hold at first.
Any strength will be viewed as corrective by Sneddon, with resistance at 111.77/81 then 112.27. If USDJPY goes above 112.87/97, he thinks his analysis (and the top) will be in doubt.