On its 4-hour to daily time frame, USD/JPY is exhibiting signs of a potential forex breakout. A large consolidation flag pattern has formed after the previous selloff earlier this year but the pair is making an attempt at falling below the range and resuming a deeper selloff.
The red line on the Ichimoku Kinko Hyo technical indicator is starting to turn down, hinting that a market trend is underway. A break below the bottom of the rising channel drawn on the chart could be a confirmation for the forex breakout signal.
The green line has crossed below the USD/JPY price a couple of days ago, indicating an early forex sell signal. Price is also starting to fall below the blue line, confirming that a downtrend is currently taking place in the short term. The longer term trend will be confirmed if dollar bears have enough momentum to push the pair below the 101.50 minor psychological support.
USD/JPY Technical Forex Breakout Signal
An actual forex breakout below the channel could hint at a move until the next long-term support at the 96.75 level. The FOMC meeting minutes have resulted to dollar weakness, as it showed that Fed officials weren’t all in agreement with Yellen’s forecast of a rate hike around six months after asset purchases end. Some officials were still very dovish with their outlook and insisted that tightening should be done gradually.
Meanwhile, the BOJ has released a relatively hawkish statement with its decision to hold off any easing moves until the economy shows signs of a slowdown. Kuroda is confident that Japan will achieve its CPI target by the end of the year but this could depend on how the recent sales tax hike will affect spending and overall economic performance.
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