The Scenario For A USD/JPY Rally Remains Valid

Both yesterday and today my attention has been focused on the USD/JPY pair.

It did rally during the Asian and the European sessions today, but the news coming from the USA pushed it back down and at the moment the pair is trading around the same level it was yesterday during the same period of the day, 110.20 – 110.40.

The limit of the wedge that I assessed yesterday (which is 140 pips) so far hasn’t been reached, but it is generally well-known that the wedge is a tricky figure and for the moment cannot be said whether the pair will reach said limit or not.

There are two valid scenarios for this pair:

There could be a possible drop toward the support trend line (in red), that has been drawn between the lows from 16th April 2017 (at 108.128) and from 14th June 2017 (at 108.806) and then we should watch out for a signal for a rally to 120 – 122.

In the second scenario the rally toward 120 – 122 will be renewed – this has been expected for a while now and I think we should see how the daily bar will close today as it could be a telling signal.