USD/JPY plunged significantly after a false breakout above a crucial dynamic resistance. We’ll see what will really happen in the upcoming days because the rate seems very heavy and it could resume the corrective phase.
The Yen dropped aggressively as the Nikkei stock index has plunged and has reached new lows on the short term. The dollar was punished by the USDX’s drop, so a further drop will force the USD to lose more ground versus all its rivals.
The Yen was supported today also by the Tertiary Industry Activity, which it has increased by 0.5%, beating the 0.3% estimate. It remains to see what the US data will bring later, but I’m not so confident that it will save the USD from the downside.
Nikkei has found a very strong resistance at the upper median line (uml) of the minor ascending pitchfork and now is pressuring the lower median line (lml). It has failed to reach the second warning line (WL2) of the major descending pitchfork signaling an overbought.
We had several gaps down in the last days, signaling that the rate is strongly bearish. Right now is trying to get back above the lower median line (lml) of the ascending pitchfork. A valid breakdown below it will and below the 150% Fibonacci line will announce a further drop and the Yen’s dominance.
The rate has dropped below the median line (ML) of the major ascending pitchfork and below the 150% Fibonacci line. Technically, it should drop towards the upper median line (uml) of the descending pitchfork after this temporary rebound. It could retest the 150% line and then will drop further. As I’ve said higher, it is very important to see what will really happen on the Nikkei and on the USDX because a further drop will force the pair to drop as well.