From Bullish Breakout to Bearish Reversal

From Bullish Breakout to Bearish Reversal
Today's technical analysis focuses on USDJPY, which interestingly shifted from a promising buy signal yesterday to a cancellation of that signal today. USDJPY had been trading within a large pennant formation (green) since the end of May, and yesterday it seemed to break out from this pattern, spurred by inflation data from the United States. However, the upward movement wasn't significant enough to solidify the breakout.
In an interesting turn of events, the pair returned to the pennant today, effectively negating yesterday's buy signal. This drop - which has made the USD one of the weakest currencies currently - is largely a response to the disappointing Producer Price Index (PPI) figures from the US, which declined by 0.3%, well below the expected decrease of 0.1%.

This weaker than anticipated data has resulted in a weakened USD, reflected in the USDJPY chart. With the pair now back within the confines of the symmetric triangle, we have a legitimate sell signal based on yesterday's false bullish breakout. Consequently, the odds for a further downward trend are now considerably higher than for a potential upswing. Investors should monitor the pair closely for the next potential move.
 
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