USD/JPY plunged and erased the morning gains and now is pressuring a very strong dynamic support (resistance has turned into support). It has jumped above two crucial resistance levels, but it has failed to stay there and now could close the day below an important obstacle.
We’ll see what will really happen in the upcoming days because if the Nikkei will drop further, then the Yen could reach new highs. The USD crashes as the USDX has plunged as well and could invalidate further increase in the upcoming period if it will close below the broken levels.
USDX has deleted the morning gains and now seems determined to reach new lows. JP225 decreased as well and has pushed the Yen higher versus all its rivals and not only against the USD.
You can see that the Nikkei has come back lower after the breakout above the 150% Fibonacci line and could retest the outside sliding line (SL) again. I’ve told you that we may have only a temporary rebound on the Nikkei. So, another drop will force the Yen to dominate the currency market. The USD/JPY will drop also if the USDX will push the USD much lower.
You can see that the USD/JPY has increased in the first part of the day and has climbed above the SL and it was almost to reach the first warning line (wl1). Now it has decreased and has reached the median line (ML) again, but maybe it will try again to breakout above the first warning line (wl1). So, personally, I believe that only a false breakout above the warning line (wl1) or a failure to reach it will really signal a significant drop.
A further increase will be confirmed by a valid breakout above the SL and above the warning line (wl1) and the next target will be at the SL1.