Saturday, September 03, 2016

USD/JPY after the NFP

Another pair that surprised traders after the poor NFP data yesterday was the USD/JPY.

It was logical for the USD to drop, but no such thing happened.

The pair moved inexorably to the upside and did exactly what I expected it would do and wrote about in my last post>>>  – it broke above the resistance trendline, retraced and on its second attempt decisively broke above the trendline, with the daily candlestick closing above it.

I think such a breakout, in combination with the double bottom that we can observe on the daily and weekly time frames, as well as the strong divergence of the RSI indicator on the daily time frame, can be considered the first signal for a trend reversal.

In my opinion, after yesterday’s move to the upside that lasted around 160 pips, next week the pair will likely test this breakout level and then continue moving to the upside towards 105.00.