USD/JPY is trading in the red on the H4 chart, but the current drop could be temporary before the bulls take full control again. The price decreases only because the USDX has dropped far below the 100.00 psychological level.
The Japanese Yen could depreciate further versus the USD and against other major currencies if the Nikkei stock index resumes the upside movement. On the other hand, the Dollar Index has reached dynamic support, so a bounce back could strengthen the USD.
USD/JPY has managed to climb above the 38.2% Fibonacci level and above the PP (107.62) level signaling a further increase. The price is trading above the minor uptrend line, so the outlook remains bullish.
The pair has made another higher high, 108.08, and now has come back to retest the broken PP (107.62) and the 38.2% level, USD/JPY should climb way higher if the price stabilizes above the broken levels.
A further increase in the short term will be invalidated by a valid breakdown below the minor uptrend line. Technically, USD/JPY was expected to increase further after the failure to come back to retest the 50% level and the broken Falling Wedge resistance.
- USD/JPY Trading Tips
I believe that a rejection from the 38.2% and the PP (107.62) followed by a climb above 108.08 will confirm a further increase and will give us a chance to buy this pair again. The next upside target is seen at the R1 (108.90), while the second one is represented by the 23.6% Fibonacci level.
USD/JPY could approach in time the R2 (110.65) and the upper median line (UML) if it stays above the uptrend line and near-term obstacles will be broken.
A short opportunity could appear after a breakdown below the minor uptrend line and if USD/JPY confirms a potential drop by testing and retesting the broken line.
