USDJPY pair back near critical support


It has not been a positive week for the USDJPY pair, and it is down circa 100 pips from this week's highs. On Friday, it was trading down another 0.2% and was seen hovering near 104.70.

The greenback dropped to the critical support area of 104.00 - 104.50, where July and September lows are located. This is the last line of defense for bulls, and if the dollar drops below this level, large stop-losses will be hit. 

In that case, the medium-term trend would most likely change to bearish, targeting the psychological level of 100.00. 

Alternatively, if the pair defends this support zone, there is a potential of a triple-bottom pattern. That is usually a strong bullish formation, which often prompts a larger rally. 

The first resistance could be in the 105.20 area, and the greenback needs to rise above this zone for the short-term trend to become bullish. The major resistance now stands at October' highs of 106.00.
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