USDJPY - Bearish Below 78.32; Immediate profit objective 77.91

Although Monday’s USDJPY sell-off is negative, yesterday’s signals pointed to investor indecision and sentiment traded predominantly sideways for an unchanged close. A bullish daily Hammer at last week’s July low is a signal highlighting bearish exhaustion. However, buying has been tentative and limited and a sequence of modest higher lows has been ended. With this in mind, today’s outlook is bearish below a stop loss at 78.32. The immediate profit objective is 77.91, today’s low, with a move through this point targeting 77.77 and then towards 77.65, June’s base.

The risk to this call, however, would be with buying through a stop at 78.32, yesterday’s high. This would be a cautiously positive signal ending a sequence of lower daily highs and improving sentiment to 78.57, this week’s top and then towards 78.69, Friday’s high trade.