Last week was very eventful for USDJPY. Apart from the technical analysis, positive sentiment was strengthened here by the rise on the global exchanges. In the last week, USDJPY broke three important resistances. In theory, that should be a strong buy signal. Let’s see if the positive sentiment is still here.

First, let’s take a look at those broken resistances that we mentioned above. The first one was the neckline of the inverse head and shoulders pattern (red). The second one was the mid-term downwards trend line (orange). Those two resistances gave the price momentum to break the last one: the upper line of the wedge pattern (green). After the breakout, the price formed a small rectangle pattern (yellow) and went higher: this is the epitome of a proper buy signal.

Currently, the price is undergoing a small correction, but everything seems to be under control and we should see a further upswing. As long as we stay above the yellow area, the current drop will be just a small correction. Coming back below the yellow support could potentially kill the demand here and be an invitation for a false breakout pattern, which could reverse the powers on the USDJPY. The second option is less likely to happen.