USD/JPY could not break out above the resistance around 113.50 – 113.70 and after forming three D1 bars (a marubozu and two doji bars) below the above-mentioned resistance it started falling:
At the moment the pair has reached a strong support at 112.50 and at that level it is forming a barbed wire pattern. That formation is ambiguous and as a rule it is not a good idea to trade it without more clarity about how the instrument will develop. More clarity can be expected once the American and Asian sessions open and their traders join the market, as usually they are more interested in this currency pair.
In case there is a breakout below the support we could expect a test of the next support around 111.50 – 111.30.
In the alternate scenario there will be a rally to 113.20 – 113.30.