USD/JPY Another False Breakout?

USD/JPY rallies as the Dollar Index has increased as much as 92.54. The index is pressuring 92.47 static resistance and a dynamic upside obstacle. The pair could increase further if the DXY and JP225 will resume their growth. Still, the currency pair is trapped within a range pattern.

The price has reached a resistance zone, so we'll have to wait for a fresh trading signal. JP225 (Nikkei) dropped a little after its strong rally. The Japanese stock index is still bullish, so further growth indicates JPY's depreciation.

USD/JPY was driven higher by the DXY. The Japanese economic data has come in mixed. The Average Hourly Earnings increased by 1.0% compared to 0.2% expected, the Household Spending registered only a 0.7% growth versus 2.6% forecast, while Leading Indicators was reported higher at 104.1% versus 103.5% expected.

USD/JPY Exit Its Range Soon?

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USD/JPY is pressuring the weekly R1 (110.20) and the 110.22 resistance levels. Its failure to reach and retest the 109.48 level signaled potential growth. Technically, the outside sliding line (SL) and the lower median line (LML) are seen as resistance levels.

Personally, I believe that only a valid breakout above the lower median line (LML) could signal an upwards continuation. On the other hand, a bearish pattern here could signal a downside movement. Technically, the bullish pressure is high after its failure to make a new lower low.

Forecast!

USD/JPY is located within a resistance zone, so we'll have to wait for a valid breakout through 110.41 before considering going long. A false breakout through this level could bring a new sell-off.

Technically, the pair could develop an important upwards movement if it jumps and stabilizes above 110.67, the 23.6% retracement level.

The material has been provided by InstaForex Company - www.instaforex.com

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