USD/JPY Price Analysis: Bears have taken control, eye weekly 38.2% Fibo near 125.00

• USD/JPY bears are taking control and eye a run to 125 the figure for the days ahead.
• The four-hour outlook is bullish for the immediate hours as the price corrects towards a 38.2% Fibo.

As per the prior series of analyses, USD/JPY embarks on a significant correction below key daily support, and before that, USD/JPY Price Analysis: Bulls meeting tough resistance from bears despite bull flag, the price is moving in accordance with the bearish outlook and the following illustrates the before, now and possibilities for the forthcoming sessions and days ahead. 

USD/JPY prior analysis

From a weekly perspective, the price was potentially overstretched and due for a correction. On the daily chart, the price had formed a W-formation which pulled in the bids and offers started to emerge:

The bull flag breakout failed:

The pair had bucked the trend last Thursday, breaking below prior support and denied the bulls that were otherwise seeking more from the bullish flag pattern on the daily chart:

The price action had left an M-formation on the daily chart, the opposite of the prior W-formation. These patterns often see the price reverting to restest the prior lows or the neckline of the chart pattern. In this case, the neckline was near 129.80. 

USD/JPY live market

The weekly correction is well and truly underway with eyes on a break of 127 the figure and then the 38.2% Fibonacci retracement that aligns with prior highs made in Feb near 125.00.

The daily chart has seen the price revert to test the neckline of the M-formation at 129.795 and has since moved lower in a downside continuation. 

However, another M-formation has been left:

Whether the bears commit now on a daily basis having already forced back the bears from the neckline at 128.705, or if the price needs to close on a daily basis into the neckline, the outlook is still bearish. 

USD/JPY H4 chart

The four-hour outlook is bullish for the immediate hours as the price corrects towards a 38.2% Fibo and to test the resistance structure. If the bears commit between here and the 61.8% ratio near 128.20, then there will be scope for a downside continuation and fresh corrective low for the days ahead. A break of 126.50 will be required in order to clear the way toward the weekly 38.2% ratio target nearer 125 the figure. On the flipside, 128.705 is a key resistance that could be the ultimate defence of a bullish continuation.