USD/JPY - back down for retest of ascending weekly trend zone
Another week passed and another long wick to the upside was posted on USD/JPY. Bearish sentiment persisted, with the weekly candle showing an extremely long wick to the upside, very similar to the weeks prior. Prices were held up by the 4H ascending trend line, which buoyed prices during the first half of the week, reaching above the resistance at 104.35. However, once again, bullish momentum could not be sustained and prices withdrew, falling during the second half.
Price is now forming higher lows and lower highs on the daily timeframe, which is creating a near-term triangle formation. Once price breaks and closes outside the pattern we can expect to see a larger move, either to the upside or downside. As price is still within a bearish overall trend, we would have to favour a bearish outcome at this moment in time. If prices break and close below the ascending 4H trend line that has been forming since the start of November, we would expect a return of price to test the ascending weekly trend line, at approx. 103.5, perhaps even pushing as low as 103.2.
Price is now forming higher lows and lower highs on the daily timeframe, which is creating a near-term triangle formation. Once price breaks and closes outside the pattern we can expect to see a larger move, either to the upside or downside. As price is still within a bearish overall trend, we would have to favour a bearish outcome at this moment in time. If prices break and close below the ascending 4H trend line that has been forming since the start of November, we would expect a return of price to test the ascending weekly trend line, at approx. 103.5, perhaps even pushing as low as 103.2.