USD/JPY has been stuck in a horizontal channel pattern for sometime, and it has managed to break out of this pattern earlier today. Is this a true break out or a false break out?
The recently released retail sales report from the U.S. came in better than expected. This positive report, in turn, resulted in an increased demand for the dollar. Further, the BOJ monetary policy meeting minutes did not strike a substantial deal. As such, traders have been free to sell-off the Japanese currency. The performance of the USD/JPY will still be at the mercy of market sentiment.
As earlier mentioned, technical analysis reveals USD/JPY has just closed above the upper line of the horizontal channel pattern. If the pair continues with this upside run, it may encounter resistance at 79.00. On the other hand, if it retreats, it may encounter a support at 78.40.
Since the pair has broken the pattern, it is prudent to allow it make some convincing runs to the upside before pulling the buy trigger. Otherwise, you may be caught in a false breakout if you decide to enter now.
DISCLOSURE & DISCLAIMER: THE ABOVE IS FOR INFORMATIONAL PURPOSES ONLY AND NOT TO BE CONSTRUED AS SPECIFIC TRADING ADVICE. RESPONSIBILITY FOR TRADE DECISIONS IS SOLELY WITH THE READER.