Price is trading in the red on the Daily chart, but this could still be only a temporary retreat before the rate will increase again. The next week could be crucial because the rate has already signaled an exhaustion situation, but we still need a confirmation that the rate will drop significantly again.

Maybe the USD/JPY will increase a little in the upcoming days only to test and retest the near-term resistance levels before it will drop again. It is crucial to see what will happen on the USDX and on the Nikkei stock index because a significant drop will force the pair to reach fresh new lows.

Nikkei bounced back from right above the second warning line (wl2) of the ascending pitchfork. It is located above the UML again and could reach and retest the outside sliding line (SL) again. Unfortunately, this could be only a temporary rebound and the rate could drop aggressively and could make a valid breakdown below the warning line (wl2). This scenario will force the Yen to increase further versus all its rivals.

Right now it is hard to believe that we’ll have a larger upside movement. Maybe only a significant false breakdown below the warning line (wl2) it will really announce a potential broader upside movement.

USD/JPY dropped below the ML again after the false breakout above the confluence between the sliding line (SL) and the warning line (wl1). It has failed to move towards the SL1 again, so technically, it is somehow expected to drop. However, personally, I would like to see a warning line (wl1) retest or a false breakout above this line before it will move down again.

You should be careful because a valid breakout above the warning line (wl1) and above the ML could confirm a further increase.