Downtrend line on USDJPY was broken today. It had been on the cards for a month, but all previous attempts to break the line ended in rebound. Currently on the daily chart you can see a strong bullish candle aiming towards the next resistance level at 103.00. I pointed out already that settlement will occur in a while, because the price approached the downtrend line and in addition to an important support.
Currently the main scenario is an attempt to change the trend on the USDJPY. If today’s breaking the downtrend line will not be denied next resistances are at levels: 103.00, 104.00. Breaking the last one would give an important signal to bulls that the trend is changing because then we would be witnessing a change of sequence at the D1 time frame of successive lower peaks and dips to the first higher low and higher high. This is one of the simplest and at the same time one of the most effective techniques to identify trend.
However the breakout could be false, since the downward trend on the USDJPY has been going on a long time and bears will still try their hand here. Negation of today’s break out would likely end up USDJPY below support at 99.80 and would create a new wave of decreases. It is, however, only an alternative scenario, not yet confirmed on the chart.
Chart for USDJPY H4 interval.
