The USD/JPY dropped significantly today and the Yen was boosted by the Nikkei stock index. The rate plunge after the impressive upside movement. I’ve told you in the previous week that the  Yen could increase and could dominate the currency market as the Nikkie stock index has shown some exhaustion signs.

The JP225 has turned to the downside on the short term and could reach fresh new lows in the upcoming days. The index has failed to test and retest a dynamic resistance and now seems very heavy.

We have an important activity on this pair even if the Japanese banks are closed today in observance of Constitution Day.

The Jp225 dropped and resumed the yesterday’s bearish candle. You can see that the rate has failed to reach and retest the median line (ml) of the minor ascending pitchfork. I’ve told you that it should drop towards the lower median line (lml) in the upcoming days. Price failed to approach and reach the upper median line (UML) of the descending pitchfork signaling an exhaustion, so the current drop is natural.

It is somehow expected to find a temporary support at the lower median line (lml) of the minor ascending pitchfork. A valid breakdown will signal a larger drop and a Yen’ dominance.

On the other hand, the USD decreased versus all its rivals as the USDX dropped significantly and now is pressuring and dynamic support (resistance has turned into support) and the 92.50 static support.

The rate increased significantly after the breakout above the fourth warning line (WL4) of the descending pitchfork, but now it could come back down to test and retest some support levels before will jump higher.

We may have a buying opportunity only after a decrease and after a retest of one of the important support levels. Right now is hard to believe that we’ll have a larger drop, but a minor corrective phase ia natural.