Hi, dear traders!
Although the US dollar increased against risk assets last week, its performance against the Japanese yen was completely different, as investors diversified risks. This could be seen during trading on January 17-21.
Weekly
The highlighted bullish candlestick with a sizeable upper shadow preceded a massive drop for the pair. Efforts by bullish traders to reverse the pair failed, as USD/JPY met strong resistance from the key technical and psychological level of 115.00. The pair began to fall from 115.08 and finished last week's trading with a strong decline, leaving a long upper shadow.
The red Tenkan-Sen line of the Ichimoku cloud at 114.46 served as an additional obstacle for USD/JPY. The pair has declined slightly and is currently near the significant support level at 113.50. If USD/JPY breaks through 113.50 and 113.00, it could then test the next support level at 112.55. The blue lower boundary of the ascending channel is near 112.55 - the pair's further trajectory would be decided by its performance here. The drop from 116.37 to 113.55 could be called a correction, but the trend reversal would only be confirmed once the pair leaves the ascending price channel. The performance of USD/JPY on the weekly chart suggests it could decline further.
Daily
USD/JPY's fall can be seen more clearly on the daily chart. The pair has failed to rise upwards from the Ichimoku cloud so far, and today's candlestick with its long upper shadow is becoming increasingly bearish. Opening short positions is the main trading strategy at the moment - they can be opened after USD/JPY performs a true breakout of the support at 113.48 and reverts towards this level. Short positions could also be opened near 113.90.
Good luck!