The last time I posted my analysis on USD/JPY I was longer-term bullish but also noted the difficulties in the short-term and the resistance levels that needed to be broken in order to confirm the new up trend has started. The USD/JPY was rejected at resistance the last time I posted my analysis and price fell towards 116 to form a double bottom. Price is declining from 120.80 in an overlapping pattern and that is why I continue to believe this is a correction. Soon we should see the new upward wave start. The rise in USD/JPY from 101 is impulsive and incomplete in my opinion.
Important support is at 115.90 while important resistance is at 119 and at 120.80. Breaking above 119 will confirm that start of the new upward wave towards 123-124. However the upside potential is even bigger for the longer-term with possible targets of 130-140.
The A-B-C pattern could very well be over. Price is testing the Ichimoku cloud resistance after the double bottom at the 116 area. Breaking above the cloud will be an initial buy signal and this occurs if price breaks above 118.60.
In the short-term chart as shown above the fx pair managed to push above the cloud but only marginally. The pull back retraced the 50% of the rise from the lows and if we see a new higher high above 118.85, we will get the first bullish signal. Next buy signal will come when and if price breaks above 120. Until then I prefer to stay neutral as I plan to trade the longer-term targets above 125.
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