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Commerzbank: short on USD/JPY

Commerzbank recommends selling USD/JPY on rallies to 104.75 and adding to this short at 105.15. They believe the pair has topped in a short term and will retrace into the 103.35/102.05 area.

"The market has not only reversed from its long term Fibonacci retracement at 105.49, but we also have a divergence of the daily and weekly RSI", CB clarifies.

"However it will need to close below its 20-day MA at 104.20 to confirm this view," analysts add. "The Elliott wave count is suggesting that we will then see a deeper retracement to 103.35/102.05 (23.6% and 38.2% retracement of the move up from October)".

Longer term, Commerzbank is still bullish on the pair as the market last year broke up from a large triangle and this points to a longer term target of 108.86.

Chart. Daily USD/JPY

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