After A Huge Drop USD/JPY Stopped At The 110.00 Support Level

The scandals around President Trump in the past few days became a powerful catalyst for a huge drop of the USD against all other main currencies.

Only for six days the USD/JPY pair fell with over 400 pips, and yesterday alone the drop was 250 pips. In other words, the move to the downside reached exactly 61.8% Fibo of the last rally from 108.128 (17th April 2018) to 114.22267 (11th May 2017).

Obviously 110.00 is a strong support level, and we could very well see the daily bar closing as a very telling doji, which would mean that bulls and the bears have become equal and there is uncertainty on the on the market. So, what follows next?

On the H1 time frame this uncertainty is even clearer, as the pattern that is forming there is hinting at the formation of a head and shoulders figure. I am saying “is hinting at” because so far there is no complete and clear figure.

Regardless, in order to bring some clarity to the situation we need to follow very carefully what figure the pair will form in this support zone. And we should also follow the development of the scandal around President Trump and his possible connection to Moscow.