In today’s technical analysis, let’s focus on USD/JPY, which had a very impressive second half of last week.
The rally started with a false breakout below the orange support, after which the price surged significantly higher. As the new week kicked off on Monday, buyers pushed the pair above the red dynamic resistance, hinting at a bullish breakout.
But here’s the catch — that breakout may not hold. The price is now reversing sharply, raising the risk that we’re seeing a false breakout above two major resistances: the red downtrend line and the yellow horizontal resistance, which marks last week’s highs.
If sellers take control and force an H4 close below those two resistances, the sentiment would flip negative, opening the door for a drop back toward the orange horizontal support. On the flip side, if buyers manage to secure an H4 close above the Asian session highs, that would confirm the bullish case and serve as a proper signal to go long.