False Breakout Sparks Bullish Signal on Dollar-Yen

In today’s technical analysis, let’s take a closer look at the American dollar to Japanese yen, where the dollar is showing renewed strength after the FOMC decision.

The latest rate move and policy stance gave the U.S. dollar a solid boost, making it one of the strongest currencies across the board. On USD/JPY, that strength is very visible: the pair recently staged a false breakout, marked with the orange rectangle, below two important supports – the blue horizontal level and the black dynamic trendline. That false move was quickly denied, and in technical terms, false breakouts often act as strong signals in the opposite direction. Here, it has provided a fresh, long-term buy signal.

While the broader sentiment remains decisively bullish, traders should be aware of possible short-term developments. A minor bearish correction cannot be ruled out. Such a move would likely test the recently broken resistances, which now act as supports. If those levels hold, it would only reinforce the positive outlook and strengthen the long-term bullish case.

In a nutshell, the long-term sentiment on USD/JPY is positive after the FOMC boost, but a brief corrective phase may emerge before the next leg higher.

Source: https://www.axiory.com/analytics/technical-analysis/false-breakout-sparks-bullish-signal-on-dollar-yen