USDJPY accelerates after bouncing off 131 support
05 January 2023
Thursday has been a really great day for the American Dollar. The USD is by far the strongest currency of the pack today and buyers have not said their last words yet, as we are just at the end of the European session. The recent reversal on the USD is not happening randomly, especially on the USDJPY, where the pair is bouncing off absolutely key support.
USDJPY had been in a downtrend since the first half of November, after the price broke the long-term up trendline (blue). The bearish momentum was significant enough to drive the price toward the key support on the 131 (orange). This is where the downtrend stopped and buyers started their counterattack.
As for now, the first target is the black, mid-term down trendline which has been connecting the lower lows since the middle of November. A breakout of that resistance will be the first step towards reaching the horizontal resistance on the 139 (green). Once the green resistance is broken, we will receive a full, long-term buy signal.
On the other hand, the price can still reverse and break the orange area. It is currently less likely to happen but if it does, it would mean a proper, long-term signal to sell.