The current chart of USD/JPY is dominated by two major technical levels—the green lines forming a symmetric triangle pattern. This formation is now defining the entire price action on the pair and will likely dictate the next major move.
On the downside, we have the lower green line, which served a dual role: it acted both as the lower boundary of the triangle and as the neckline of a head and shoulders pattern. This area was tested and defended strongly last week, resulting in a powerful bullish reversal during the second half of the week.
That rally, however, took the price straight up to the upper green line—a trendline connecting the top of the head and the top of the right shoulder, and also functioning as the upper edge of the triangle. The new trading week has opened with a clear bounce off this resistance, confirming its strength and temporarily halting the upward momentum.
The spotlight now shifts to the blue horizontal support level, which is being broken at the time of writing. This blue level had offered support during the recent upswing, and its current failure suggests the potential for a renewed bearish move. If the price stays below this blue level, the downside scenario becomes slightly more probable.
However, not all is lost for the bulls. If USD/JPY manages to reclaim the blue support, and more importantly, if it breaks above the upper green trendline, this would mark a decisive long-term buy signal. That would also invalidate the head and shoulders structure and confirm a breakout from the triangle to the upside—an ideal setup for buyers.
In the midterm, the bullish breakout scenario remains the most probable outcome. But until we see confirmation on the chart, traders should stay cautious and patient, watching price action closely around these key technical levels.