The USD/JPY pair rallied in the short term and today reached 136.55 printing a new higher high. Still, after its strong rally, a retreat was natural. Now, it has turned to the downside and it was trading at 135.99.
After positive economic data on Friday, the US reported mixed data today. The Durable Goods Orders dropped by 4.5% versus the 3.7% drop estimated, while Core Durable Goods Orders registered a 0.7% growth, beating the 0.1% growth expected. Later, Pending Home Sales data will be released as well.
Tomorrow, the Japanese Retail Sales, Prelim Industrial Production, BOJ Core CPI, and Housing Starts are likely to move the price. Also, BOJ Gov-Designate Ueda Speaks and the US CB Consumer Confidence could really shake the markets.
USD/JPY natural retreatTechnically, the currency pair rallied after failing to stay below the median line (ml) of the ascending pitchfork. After its strong rally, a retreat was natural. The price action developed a flag pattern which could announce an upside continuation.
The weekly pivot point of 135.63 and the median line (ml) represent downside targets and obstacles (support levels). The 135.11 stands as a strong static support.
USD/JPY forecastTesting and retesting the weekly pivot point of 135.63 and registering false breakouts may announce a new bullish momentum. False breakdowns with great separation below the flag's downside line and below the pivot point represent a buying signal.
Also, a valid breakout through the minor downtrend line announces further growth and brings new longs.