USD/JPY rallied today and resumed the last 2 days upside movement. The current bullish momentum is natural after the false breakdown below a dynamic support. Price is pressuring an important dynamic resistance, so a valid breakout will signal a potential further increase.

I’ve told you in the previous report that we may have a significant drop only if the rate will manage to close and stabilize below the 110.00 psychological level, but unfortunately, the rate has made only a false breakdown below this level.

The current rebound could be only a temporary one if the Nikkei stock index will drop again after the short term bounce back.

As you can see on the Daily chart, the JP225 index has found a strong support on the lower median line (lml) of the minor ascending pitchfork and now is trying to reach and retest the downside 50% Fibonacci line of the ascending pitchfork and the outside sliding line (SL).

You should know that a valid breakout above the outside 50% Fibonacci line could announce a further increase and a Yen’s sell-off. However, a valid breakdown from the ascending pitchfork’s body will signal a downside movement and a Yen’s dominance on the short term.

USD/JPY failed once again to make a valid breakdown below the inside sliding line (sl) and now could jump much above the upside 50% Fibonacci line. The current rebound is natural, so the rate could approach the upside sliding line (sl1), where it could find resistance again.

Only a valid breakout above the sliding line (sl1) will announce a broader upside movement towards the upper median line (uml). It could drop further if the rate will make only a false breakout above the 50% line  of above the sliding line (sl1).