USD/JPY Bearish Flag Breakout – Quick Technical Setup

What’s up, fellas.

USD/JPY begins the European session bearish around 107.400 and up from Friday’s low of 107.05. The Japanese yen is going through a haven bid, considering the ongoing geopolitical tensions between the United States and Iran. Tensions boiled on Friday after Tehran accused the US of escalating a regional crisis. Iranian missiles could easily hit US ships in the Gulf, and any dispute would endanger global energy supplies.

Besides, the Markit US composite PMI came in slightly below the previous read (at 50.6 from 50.9 in May), while the manufacturing index eased to 50.1 (from 50.5 in the month prior).

Following its rejection from the 20 and 50 periods EMA at 108.400, the market stays bearish to target 107.060 level. Well, 108.400 is also a bearish flag pattern’s support level which is working as resistance after the USD/JPY breakout last week.

Our initial target is likely to be 107.80, which is the 50% Fibonacci retracement and has already been tested once. Below this level, the pair is expected to consolidate between 107.800-107.060

Daily Support and Resistance
S3 106.12
S2 106.79
S1 107.03
Pivot Point 107.46
R1 107.7
R2 108.13
R3 108.8