Sept 7 (Reuters) - USD/JPY bears could tighten their grip on this market if they manage to force a daily close below a broken Fibonacci level.

After recently hitting a four-decade low against the dollar, the tide appears to be turning for the battered yen as a host of factors smoke out brash traders who had spent years betting against the Japanese currency.

While USD/JPY has fallen through the 154.78 Fibo, a 38.2% retrace of the 139.89 to 163.99 (April to July) EBS rise, bears need spot to end trading this week below this broken level. That would increase the likelihood for a bigger drop to initially test the 151.94 level, a 50% retrace of the same 139.89 to 163.99 rise. Especially as the 14-week momentum reading turned negative last week.

However, if USD/JPY does not register a weekly close under the 154.78 Fibo that would hint at a bear-trap, which is set when a market breaks below a technical level but subsequently reverses and is usually a bullish sign.
Weekly Chart

(USD/JPY Martin Miller is a Reuters market analyst. The views expressed are his own)