USD/JPY Price Analysis: Slides to fresh session low, risks breaking below 106.00 mark

• USD/JPY extended last week’s rejection slide from the 107.00 region.
• The set-up supports prospects for an eventual slide below 106.00 mark.
• Slightly oversold conditions on the 1-hourly chart warrant some caution.

The USD/JPY pair continued losing ground through the early North American session and refreshed daily lows, around the 106.15-10 area in the last hour. The intraday slide below important confluence support, comprising of 200-hour SMA and the 50% Fibonacci level of the 105.30-107.04 positive move, was seen a key trigger for bearish traders. Meanwhile, technical indicators on the daily chart maintained their bearish bias and have again started drifting into the bearish territory on the 4-hourly chart. However, RSI (14) on the 1-hourly chart is flashing oversold conditions and warrants some caution for aggressive bearish traders amid the upbeat mood across the equity markets. Hence, it will be prudent to wait for some intraday consolidation or a modest bounce before positioning for any further depreciating move. That said, the pair remains vulnerable to break below the 106.00-105.95 region (61.8% Fibo. level) and accelerate the downfall further towards the next major support near the 105.75 region. On the flip side, immediate resistance is pegged near the 106.35 region (38.2% Fibo. level). Any subsequent move up might still be seen as a selling opportunity and remain capped near the 106.50 horizontal resistance.  

Technical levels to watch