USD/JPY Price Analysis: Correction could extend to 108.00

• Sharp reversal in USD/JPY comes after days of consecutive gains and from overbought levels.
• Correction likely to continue, strong support at 107.90/108.00 should limit downside.

The USD/JPY pair on Friday hit the highest level in two months near 110.00 and on Monday it is falling dramatically. After a sharp rally a correction was overdue. The pullback now seems exacerbated but it could continue.

On the downside, a strong support is seen at 107.85/108.00 (horizontal level / 20-day moving average). While above 107.85 the bullish bias will remain in place. A break lower should lead to a test of ah short-term uptrend line, currently at 107.60.

On the upside, the immediate resistance stands at 108.60, followed by 108.80 and then 109.20. A daily close above 109.30 would signal more strength ahead and a potential resumption of the upside trend.

USD/JPY 4-hour chart