Fading Breakout of Bear Trend Line on USDJPY
Updated
USDJPY is in a horizontal tight bear flag. The market is likely waiting for US CPI and FOMC this upcoming week. I am still biased towards the downside believing that the downside breakout of the bear flag with trend continuation is more likely. The second leg down in this bear trend has been smaller indicating waning bearish momentum. We could get a test of the 20 EMA. I am bearish and holding until there is a clear bull breakout bar above the flag and above the 20 EMA.
Trade closed manually
I closed my short position after CPI. The sharp intraday reversal in the stock market was a sign that the broader market does not embrace the idea of a santa rally on falling inflation, and there would likely be a rally in the dollar as a result. This was proven correct after FOMC. However, technically USD/JPY still looks like an appealing short with a strong trend in play, and I will watch to see if there is a healthy bounce off the 20 EMA for another short. I am more biased towards a ranging or weakly downwards trending market.
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