The USD/JPY dropped today and has resumed the yesterday’s bearish candle and has touched an important dynamic support, remains to see how will react now, the traders are wondering if we’ll have a bounce or a breakout. The currency pair has decreased significantly even if the US dollar index has increased and has recovered after the yesterday’s massive drop. The Yen was forced to increase by the Nikkei’s impressive drop, the index has plunged and has resumed the minor bearish momentum.
The JP225 continues to move sideways on the Daily chart, the current drop is understandable after the failure to approach and reach the 19700 psychological level, right now is approaching the 18936 static support, a further drop will force the Yen to increase further versus all its rivals. The Nikkei could drop even to reach the 18645 horizontal support, but looks like that is developing a chart pattern, we could have a symmetrical triangle, remains to see the direction. The Nikkei maintains a bullish perspective on the short to the medium term despite the current drop.
The Japanese Yen has increased significantly versus all major currencies, not only versus the greenback, have become strongly bullish on the short term.
The price has dropped after the false breakout above the short term 23.6% retracement level and now is pressuring the second warning line (wl2) of the former ascending pitchfork, technically is expected to drop further after the failure to reach the second warning line (WL2) of the major descending pitchfork, has failed also to approach the first warning line (wl1) of the ascending pitchfork, so a further drop will be natural.
Remains to see how will react in the start of the next week, a breakdown will attract more sellers, which most likely will push the rate below the 38.2% retracement level and below the 111.58 previous low. If this scenario will happen, then the next major downside target will be at the first warning line (wl1) of the major descending pitchfork, but a rejection here will help the buyers to take the lead again on the short term.