USD/JPY plunged in yesterday’s trading session and seems determined to reach fresh new lows in the upcoming days. It remains to see what will really happen because the USD could decrease further if the USDX will reach new lows.
The Yen increased versus its rivals as the JP225 dropped again after the temporary rebound. I’ve told you that we may have another drop after the last bullish momentum. The USDX and the Nikkei’s further drop will force the USD/JPY pair to reach new lows in the upcoming period.
JP225 has found an important resistance at the outside sliding line (sl) of the minor ascending pitchfork and now has turned to the downside again. The bearish movement was stopped by the upper median line (UML) of the descending pitchfork.
It could approach and reach the second warning line (wl2) of the ascending pitchfork, a valid breakdown below this downside obstacle will open the door for a further drop and the Yen could dominate the currency market.
Personally, I believe that only a failure to reach the 20971.9 low could announce another upside movement.
USDX has retested the inside sliding line (sl1) of the ascending pitchfork, but it was rejected by this upside obstacle. It has dropped below the outside sliding line (SL1) and below the upper median line (UML) and now it could pressure the upside 50% Fibonacci line of the ascending pitchfork. However, this could still be only a temporary drop, and maybe the rate will try again to approach the sliding line (sl1).
UD/JPY has made only a false breakout above the confluence area formed between the median line (ML) and the first warning line (wl1) of the descending pitchfork. A valid breakdown below the ML will signal a further drop.
The failure to approach and reach the SL1 should send the rate much deeper in the upcoming period. However, another increase followed by a valid breakout above the ML and above the wl1 it will really signal a potential increase at least till the SL1.