Successful Breakout: USD/JPY Continues to Surge
22 May 2023
On Monday, in the technical analysis part, I provided a short update on USD/JPY. Last week, I analyzed this instrument and was bullish as the USD/JPY approached the upper resistance of a long-term sideways trend. This was my previous conclusion:
"From a price action perspective, the situation is fairly straightforward. If USD/JPY breaks above the upper line of the triangle and closes a day above the March highs, it would signal a buy. Conversely, if the price bounces off the upper black line with a bearish candlestick pattern, it would signal a short opportunity. In my opinion, the chances of the first scenario are slightly higher."
It turned out to be accurate. Just a few hours after those words were written, USD/JPY attacked and easily broke the upper line of the triangle. Following the breakout, the price tested the newly broken resistance as support and continued to climb. This was a great example of one of the most important price action principles: broken resistances often become later supports.
Today, we can observe that the price is advancing higher, confirming the breakout and the support. In my opinion, as long as we remain above the blue line, the sentiment remains positive.