The trade could have hammered the Yen in the wake of disappointing Japanese GDP readings which in turn prompted talk of a return to recession but instead the Yen initially rejected the lower low move on the charts.The trade is somewhat cheered by the prospect of a delay in the implementation of a sale tax increase. Downtrend channel resistance is seen up at 86.94 and that resistance line falls down to 86.76 on Tuesday.
Technical Outlook: The sell-off took the market to a new contract low. Momentum studies arestill bearish but are now at oversold levels and will tend to support reversal action if it occurs. The market’s shorttermtrend is negative as the close remains below the 9-day moving average. There could be some early pressuretoday given the market’s negative setup with the close below the 2nd swing support. The next downside objectiveis now at 85.20. Selling may soon dry up since the RSI is under 20 indicating the market is extremely oversold.The next area of resistance is around 86.41 and 86.83, while 1st support hits today at 85.60 and below there at85.20.