The USD/JPY is on a declining path as the price has managed to break below the major uptrend line, the pair has reached fresh new lows in the last week, but the price has rebounded on the short term because has found temporary support, the pair has retested the dynamic support and now he could move sideways on the short term till will retest a major resistance level. The pair is decreasing right now because the US dollar remains under selling pressure as the USDX has plunged in yesterday’s trading session after the poor US economic data.
The US Building Permits have dropped from 1.18M to 1.09M in March and have disappointed because the currency traders have waited for an increase to 1.20M. Moreover the Housing Starts have decreased much more than was expected, the economic indicator has fallen from 1.19M to 1.09M even if the estimate was 1.17M. The Yen has edged higher in the last hours as the Japanese Trade Balance has increased from 0.15T to 0.28T in March, the trade surplus has reached the highest level after April 2011, however the indicator has disappointed a little because didn’t reach the 0.45T forecast. The greenback needs a helping hand from the economic data today to be able to jump higher, the US is to release the Existing Home Sales indicator, which is expected to increase significantly from 5.08M to 5.29M in March, this event could lift the USD.
The price has found support at the sliding parallel line and now is struggling to rebound on the short term, the target remains at the median line (ML) of the descending pitchfork. As I’ve said above, the price could move sideways till will reach the median line, is likely that the price will retest also the 110.07 horizontal resistance. The outlook remains bearish as long as the price is trading below the median line (ML) of the descending pitchfork, the correction phase could continue till will reach the 38.2% retracement level, around 106.53 level. The USD/JPY has retested the sliding parallel line, but has close right above this dynamic support level, the sellers look exhausted and the bulls can take control on the short term, but I want to remind you that the perspective remains bearish, so don’t rush to go long on this pair until the price will jump above the median line and above the 110.07 static resistance.
The price is consolidating right above the swing low from 107.62, the pair is moving sideways and has managed to escape from the short term descending pitchfork, any rejection from the upper median line of the descending pitchfork will send the price higher toward the median line (ML) of the descending pitchfork.
I’ve added a short term ascending pitchfork on the price movement and you can see that the pair has reached the median line (ml) of this minor pitchfork and now is seeking for support, he could find strong support at the confluence zone formed at the intersection of the upper median line (uml) of the H4 descending pitchfork with the lower median line (lml) of the ascending pitchfork, could start a bullish momentum from there.