In a previous post we noted the bullish flag pattern in USDJPY and the two possible targets. Price almost touched the second target area and is now pulling back towards the break out area. This is most probably a back test of the breakout area, rather than a failed break out.
Green line - support trend line
Red horizontal Fibonacci expansions = targets
USDJPY managed to reach 112.22, but prices reversed as risk off took over due to the coronavirus threat spreading into risky assets. Price has fulfilled its upside target and we are now seeing an important back test.
Green line - support
Green rectangle - horizontal support
USDJPY has reached the previous highs and once resistance area at 110.30. Bouncing off this area would be a bullish sign. Inability to hold above 110.30 would be a very bearish sign. Major long-term support is at 108.30. Bulls need to hold above this level no matter what.