The Japanese yen registered an amazing drop versus the US dollar. USD/JPY increased as much as 112.22, but then it dropped below the 112.00 psychological level as the Nikkei index plunged on the short term. USD/JPY increased by 2.15% during the last two trading sessions amid the USDX and JP225 rally.
USD/JPY almost hit the 100% level, which could represent a strong static resistance. The major upside target is seen at the upper median line (UML) of the ascending pitchfork. The bullish momentum was somehow expected after a failure to reach and retest SL1 (sliding line).
You can see that the pair was attracted by the median line (ML) of the ascending pitchfork. The aggressive breakout above the dynamic resistance validates a further increase in the upcoming period. We may have a minor decrease on the short term after an impressive rally. A potential drop could give us a great chance to go long on this pair.
The USD can lose ground, if the JP225 and the USDX drop on the short term. This could be only temporary because the outlook is bullish as long as the pair is located above 110.21 and above the median line (ML) of the ascending pitchfork.
- Trading Recommendations
At this moment, USD/JPY is too high to consider a long position from here. But if the price decreases and consolidates, then we can go long again. A short position is not advised as the pair can increase anytime. We may have only a minor correction because the price can come back down to attract more bullish energy before it climbs towards new highs.
However, we can search for selling opportunities only if the pair registers a false breakout above the 100% (112.39) level, or if it develops a reversal pattern around this upside obstacle.
