[Reversal] USDJPY setting up for bullish breakout

Despite the US dollar sliding most of last week, USDJPY did not selloff as much as other USD pairs. As a result, price has been able to maintain the ascending channel within the right shoulder of the inverse head and shoulders pattern. Inverse head and shoulders patterns can trigger a reversal in momentum if enough volume gets behind positive price action (PA). The head of the pattern touches a key level of support, ~104.60, which acted as support during major selloffs in early 2018 and 2019. Longer term (M/W), price continues to coil within the descending triangle pattern, again, 104.60 as support for the pattern. If positive PA continues and the inverse head and shoulders pattern is activated, price may reach the ~112 range. However, that would require breaking weekly trend resistance so be mindful if you are trading this pair.

Overall market risk trends will dictate how trends turn out. It will be interesting to see if the Yen can maintain its safe haven status or if people will to the dollar.

Comment:

The bulls have not been able to take control despite bullish price action from DXY most of last week. Since this a risk oriented pair, and DXY has the rate decision on Wednesday, I suspect we wont see any commitment to either direction.