USDJPY showed more momentum as it broke above the descending triangle resistance in today’s Asian trading session. This could be a sign that the pair is in for at least 150 pips in gains, which is the same height as the chart pattern.
Stochastic is already in the overbought area though, indicating that the rally may turn. If so, price could still pull back to the broken triangle resistance around the 117.50 minor psychological support before heading further north.
If this proves to be a fakeout though, USDJPY could retreat to the bottom of the triangle around 117.40 and perhaps attempt a downside break. Based on fundamentals though, the path of least resistance for this pair is to the upside.
Although data from the US economy turned out disappointing results this week, the Fed might still be on track to tighten monetary policy sometimes next year. In Japan, data has come in stronger than expected but still reflected economic weakness, which could keep the BOJ in an easing bias.
By Kate Curtis from Trader’s Way www.tradersway.com