Since the beginning of 2017 the USDJPY pair has been moving in a downward trend, which has taken the form of a 1100p high downward channel. The support of the channel connects the minimum from 2018 and 2020, while the resistance has been tested several times, the last time on 23.03.2012.
Overall, there is a noticeable optimism in the stock market and an increase in risk appetite – risk-on, which is usually accompanied by a weakening Jen being a safe haven in difficult times.
Today we witnessed a strong breakout from the two-week narrow consolidation (Chart H4). The daily candle reached a size of 130p which, compared to the consolidation size of about 50p, can be a signal for more sustained increases.
The first target will be the nearest supply zone around 109.00.
If the quotations will permanently overcome this zone, the next target is much higher, at 111.20.
A reasonable level to take the long position seems to be the area 108.30-40, if there is a correction of today’s increases and the price appears in this area.
A negation of the growth scenario will be a return of price to the inside of the consolidation, which currently seems unlikely.
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