- USD/JPY has melted below the monthly support area but has started to stall on US dollar strength.
- An upside bias on the lower time frames would coincide with a restest of the monthly structure.
The following is a top-down analysis that illustrates the market’s structure and the probability of a bullish correction on the monthly and weekly charts following a downside correction on the daily chart.
Monthly chart
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While the price has penetrated below monthly support, the structure would now be expected to act as resistance on a re-test.
Weekly chart
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The bullish weekly W-formation is a bottoming pattern.
The price could be set to close above the support structure and trendline resistance this week.
Daily chart
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From a daily perspective, here we have an overextended W-formation within a weekly W-formation.
Before extending higher, the price would be expected to correct back to towards the neckline of the weekly formation which meets with a daily 38.2% Fibonacci retracement level and prior resistance.
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