Hmm, it looks like the USDJPY bears have finally exhausted themselves as a spinning top could be found on the 4-hour chart. Stochastics also show that conditions are deeply oversold, adding additional confirmation that the pair will retrace some of its losses. If price continues to head higher, I see potential resistance between the 38.2% and the 50.0% Fibonacci retracement levels as this region served as support before. Remember, whenever price passes through support, that level becomes resistance. Conversely, if price drops, look for a break of 89.20 to confirm the continuation of the USDJPY’s downtrend.
A descending channel? Or an inverse head and shoulders? If you pop on the daily chart of the EURJPY, you’ll see what I’m talking about! With stochastics still showing downward momentum, we could see price continue to drop and make new lows below 108.00. On the other hand, with a couple of spinning tops forming over the last two days, we could see the pair rise. If we see a daily candle close above the upper bound of the channel, it could signal that a reversal is in place.
Lastly, let’s end with a look at the CADJPY. It looks like the 85.30 price level is holding as resistance turned support level. With stochastics showing oversold conditions and a doji and spinning top forming right above support, this might indicate that sellers have run out of steam. Look for buyers to jump back in and bring price back up to former resistance just below 90.00.