Bottom line: USDJPY looking to produce a bullish break from the proposed triangle consolidation here. A break above 112.40 would confirm.
Technical Analysis:
USDJPY bulls are testing a triangle resistance line near 111.70/80 at this point in writing. A confirmed break here is expected to produce a bullish break out that might last for several weeks and months going forward. We have been presenting a potential bearish view for the USDJPY until 112.40 resistance remains intact. But looking at the triangle counts again, Wave E might have been a false breakout around 104.50 levels or Wave E would have been a triangle itself. It remains to be seen how price action behaves but probabilities are turning towards a bullish breakout. A break above 112.42 would confirm that USDJPY could be good to consider longs on dips from here. An alternate count could be the USDJPY fails to push beyond triangle resistance and produces a bearish bounce. In that case, expect prices to pullback lower again towards the 107.00/108.00 handle before deciding further direction. Let us re-look at a multi-year triangle presented here: Since 126.00 highs, the USDJPY had produced a series of 3 waves starting Wave A, which terminated close to 99.00 levels. Either Wave E terminated at 104.50 levels unfolding as a w-x-y or it is a triangle itself. Either ways, we can expect a bullish breakout from current levels or after a dip towards 108.00 (wave e of Wave E). We would remain keen and monitor price action around current levels (111.60/70), while USDJPY tests triangle resistance. A bearish reversal here would indicate a potential drop towards 108.00 at least, while a break above 112.40 would confirm bullish breakout. Traders might be willing to stay aside for now and allow price action to unfold at the triangle resistance.
Prepared by
Harsh Japee, Technical Analyst.
USDJPY Chart
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