The USD/JPY is considered one of the major currency pairs, so let us focus on it. Today's article is devoted to technical analysis. Let's consider several time frames for the pair and try to determine its further direction. Today is only Tuesday, so it is just the beginning of the trading week. Therefore, we will start our analysis from this time frame.
After the circled reversal candlestick signal has been cancelled, the started to rise rapidly. This usually happens when market participants ignore the signals, which is quite natural. If the bearish signal is cancelled, it means that the market is not going to decline. On the contrary, it is ready to move in the opposite direction. This is what is happening right now. Now let's talk about important technical details. First of all, in the course of a strong uptrend developed last week, the pair bulls managed to break through the strong bearish resistance at 109.85. So, our assumptions that the breakout of this level will lead the pair higher to the psychologically important technical level of 110.00 were fully confirmed. Secondly, we predicted a return to this key level, and this was also true. At the moment of writing, the pair has already pulled back to 109.96. After leaving a long distance behind, the pair is now trading quietly near the level of 110.47. I believe that the bulls will firstly focus on the previous highs at 110.97.
I would like to note that according to my observations, the 111.00 mark is also a very strong threshold which is quite difficult to pass. Apparently, these are not only my assumptions. It is also possible that the USD/JPY bulls decided to take a break before storming the 111.00 level. In addition, the pullback to 109.96 has significantly increased the bullish sentiment on the pair as it was a great opportunity to open more long positions. Given the current lower long shadow of the weekly candlestick, this is exactly what happened. Traders began to actively buy the pair on its pullback to 110.00. To sum up the technical picture on the weekly time frame, the pair is likely to continue its growth and end the weekly session above 111.00 somewhere near 111.35. Alternatively, the appearance of a bearish weekly candlestick with a closing price below 109.85 will indicate that the bears are ready to take over. In this case, we will have a false breakout of this level which means a subsequent decline in the pair. I personally think that the bullish scenario for USD/JPY is more relevant.
On the daily chart, we should pay attention to the candlestick from April 1 which is surely a reversal one. However, market participants are somehow reluctant to follow this signal. Only yesterday we could observe a more or less significant decline. Today, however, it has already been replaced by a rise in the quotes. So, we can reasonably assume that the circled reversal candlestick was not a reason to change the current bullish trend. It was rather an excuse to perform a correction to the important level of 110.00. If this is the case, and the correction has already been completed, the pair bulls should have opened long positions. For those who have not done this yet, I recommend opening long positions after a short pullback to the area of 110.30-110.20. I consider a pullback to 110.50 another point for opening buy positions, especially after the pair consolidates above this level on smaller time frames. If the price does not reach the resistance of 110.97, and reversal candlestick patterns appear below this level on the daily, four-hour and (or) hourly charts, try to sell the pair with the nearest target at 110.00. That is all for now.