USD/JPY On Verge Of Major Bullish Reversal
I have been bearish USD/JPY for a long time but recently and especially on Monday, I changed to neutral and look for bullish confirmation signals of a possible reversal that could at first take us back up to 106. USD/JPY has broken the long-term downward sloping trend line resistance and is testing Ichimoku cloud resistance in the daily time frame. A break out above 103.25 will be a bullish confirmation of a reversal. At the same time bulls should hold support above 101.60-101.30 area. As long as price is above that level, I remain cautiously bullish.
Moreover, we should also not ignore the triple bottom formation around 100. If this pattern is combined with a breakout above the Kumo (cloud) resistance we have a potential target of 106 at least.
On a weekly basis, we have bullish pergence signals. A confirmed break out of the bearish channel could at first push price towards the weekly Kijun-sen (yellow line indicator) and next towards the weekly cloud resistance at 110-112.
Traders should be cautious with any USD/JPY short positions as this could blow out any time. NFP this Friday will certainly play an important role on the trend that is about to start.
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