USD/JPY turned quite bullish in the first few days of this month, as the sentiment turned positive in financial markets. This pair climbed nearly 300 pips higher during that time, but buyers gave up below the big round level at 110 and since then the pressure has been on the bottom side.

In the last couple of weeks though, USD/JPY consolidated in a range, but yesterday the decline resumed again and the price continued around 100 pips lower, as safe havens such as the JPY and Gold climbed higher. But, last month’s low at 106 held well once again, reversing the price higher, so the area around around 106 has turned into support now.

The price bounced off that support area and is around 70 pips higher now, as the sentiment improved a bit overnight and safe havens retreated lower, sending USD/JPY higher. But, buyers have run into the 50 SMA (yellow) on the H1 chart now and USD/JPY seems overbought now, so we decided to take this opportunity and short this pair. We sold USD/JPY at 106.70, and now we are waiting for the bearish trend to resume.