USD/JPY - Breaks Support, Where Will It Go Next?
Last week we saw this pair breach the important support of 109.00, falling to lows of 108.12, which was 12 pips away from our next support at 108.00. Though we managed to break these supports, towards the end of the week on Thursday and Friday, price reversed sharply to the upside and managed to close well above the broken support of 109.000 at 109.48.
During last weeks analysis, this reversal was in fact called and explained within the member's area as we set our sights on a retest of the monthly key level off 110.00. Currently, this level has not yet been reached as we sit 50 pips away. Initially last week a retest of this level was set as there is a possible head and shoulders pattern forming on the Weekly / Daily chart where we could look out for a rejection before a new leg down towards 106.00 longterm. There are various confluences to suggest this long-term level can be met as shown on my chart, with the 61.8% Fibonacci retracement level lining up perfectly with the 110.00 resistance level and my target extensions also lining themselves up perfectly with my long-term supports of 107.30 and 106.00.
However, with such a huge retracement on the weekly chart last week, printing a large pin bar candle which shows clear rejection of the 108/109.00 areas, we need to be mindful that if prices continue to reach 110.000 as expected, we may, in fact, break through and push higher, therefore this level is critical in the week ahead and will need to be assessed carefully.