The USDJPY currency pair, on the D1 time-frame, made a brief descending interchange until March 9 when a lower bottom was recorded at 101.178. Buyers made their move at that level and demand overcame supply.
After the bottom at 101.178, the market broke through the 15 and 34 Simple Moving Averages and the Momentum Oscillator broke through the zero baseline into positive territory. This could have warned technical traders of a possible price reversal or development of a new trend.
The likely reversal was further supported by a series of Strong Bullish Japanese Candlesticks that occurred during the upward move.
A probable critical resistance level formed when a top was recorded on March 24 at 111.711. Sellers are currently trying to drive the market lower and the USDJPY pair may find a new bottom at 107.120.
If the pair manages to break through the critical resistance level at 111.711, then three possible price targets can be anticipated from there. Attaching the Fibonacci tool to the top at 111.711 and dragging it to the possible support level at 107.120, the following targets can be calculated. The first target can be estimated at 114.548 (161 %), the second price target may be calculated at 119.139 (261.8%). The third and final target may be predicted at 126.567 (423.6%).
If the 107.120 support level is broken, the anticipated price targets are annulled and must be re-evaluated.
As long as buyers maintain a positive sentiment and demand overcomes supply, the outlook for the USDJPY currency pair on the Daily time-frame will remain bullish.
Written by Theunis Kruger, FX Trainer at FXTM