USD/JPY: Bearish cracks, focus shifts south

The daily chart communicates more trouble ahead. The close near the day lows after an outlier move of nearly 2x the average range in increasing volume ticks all the boxes. The price action is a reminder of the current disconnect that has existed and still does between the pair pricing and hammered risk-off conditions / US vs JP yield spread. A break through 112.50 daily liquidity would expose the next key decision point at 112.00 round number ahead of 111.70.

The hourly chart has confirmed a fresh downcycle, with an amplitude of extension exceeding the previous leg down, which bodes well for the interest of shorts. The selling volume has been very steady throughout the move down, which reinforces the sell-side outlook. The key areas to engage as a sellers for the most attractive prices include 113.20 ahead of 113.39.