USD/JPY retests buyers. New bullish momentum?

The USD/JPY pair dropped as the Dollar Index plunged weakening the USD. Meanwhile, the Japanese Yen Futures tried to rebound. After its most recent swing higher, a temporary decline was somehow expected. In the short term, it could only test and retest the immediate support levels before trying to extend its growth.

At the time of writing, USD/JPY was traded at 115.04 level right above the 115.00 psychological level. Surprisingly or not, the pair dropped even if the Japanese economic data came in worse than expected. The Consumer Confidence was reported at 36.7 below 36.9 expected, Housing Starts rose by 4.2% compared to 8.2% expected, and Retail Sales registered only a 1.4% growth versus 2.9% estimates. Moreover, the Prelim Industrial Production dropped by 1.0% compared to the 0.5% drop forecasted.

Technically, the USD/JPY pair failed to reach and retest the first warning line (WL1) of the Descending Pitchfork. It has slipped lower and now it has found temporary support at the 150% Fibonacci line.

As long as it stays above this line and above the weekly pivot point (114.78), USD/JPY could still try to reach the warning line (WL1). A larger drop could be activated by a valid breakdown below the weekly pivot point.

A sideways movement above the 115.00 psychological level and staying near the WL1 could announce an imminent upside breakout. After failing to make a new lower low, to drop below 113.48, or to stay below the downtrend line, USD/JPY signaled that the downside movement ended.

A new higher high, a bullish closure above 115.68 could activate an upside continuation and could bring new long opportunities.