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Fan Yang

USD/JPY - Expected Breakout Materialized; Now Expecting a Pullback (8/29)

In the previous session, we observed that USD/JPY's consolidation was taking the shape of a sideways, coiling pattern. More importantly, we noted that USD/JPY was anchoring above 111 and looked bullish. The RSI held above 40 and reflected maintenance of the prevailing bullish momentum. Price action looked bullish and was ready to break above the consolidation pattern.

USD/JPY 1H Chart

(click to enlarge)

Breakout, Now Pullback:
- As we can see on the 1H chart, price did indeed break higher above this week's consolidation pattern.
- As the RSI pushes above 70, we should start anticipate a near-term/short-term consolidation. In this context, we can anticipate a pullback.
- If there is a pullback, we should anticipate support around/above 111.40. 
- A break below 111.20 would be concerning for the bullish outlook.
- Also, we should once again look at the RSI and anticipate support if it approaches 40. 

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