The USDJPY fell below floor support between 81.85-97 and this should have led to a momentum move to the downside.

Initially it did, but selling dried up against a trend line support line on the hourly chart (see below) and the move back higher started. What now?

  • Price is above 38.2% retracement of sharp move down yesterday and today.
  • Next target comes in at the 50% and 100 hour MA at the 82.422
  • Above that the 200 hour MA and 61.8% at the 82.62 area

TRADING LESSON: The move from the base (see 5 minute chart below) shows bullish bias forming.

  • 100 and 200 bar converge with the price (I call it Three’s a Crowd and look for a break away)
  • Trend lines form pennant defining risk and breakout levels
  • Final test below 100 and 200 bar MA cannot break below support trend line
  • Rally higher begins

Look for retracements of legs to hold 38.2%-50% to keep the bullish bias in tact.