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USD/JPY has found strong support again and now it has turned to the upside. Technically, the pair is moving sideways in the short term. JP225 (Nikkei) and the Dollar Index have increased providing support to USD/JPY.
When the Nikkei increases, the Japanese yen drops. A the same time, a rise in the DXY pushes the USD higher versus its rivals. The pair continued to increase ahead of the FOMC Meeting Minutes. This high-impact event is most likely to change the sentiment if the report is dovish.
The greenback received a helping hand from the US Building Permits today. The indicator increased from 1.59M to 1.64M, beating the 1.61M expected. On the other hand, the Japanese economic data has come in mixed today.
USD/JPY Strong Rally
USD/JPY is pressuring the weekly pivot point level of 109.97. A break of this static resistance could signal further growth. It has found support right below the ascending pitchfork's lower median line (LML) on the weekly S1 (109.16).
Failing to reach and retest the 61.8% retracement level signaled strong buyers. USD/JPY could still rise as long as it stays above the lower median line (LML). The ascending pitchfork's median line (ML) is seen as an important upside target.
USD/JPY has printed a potential Inverse Head & Shoulders pattern. Still, this reversal pattern could be activated only if the price jumps and stabilizes above the 23.6% (110.68) retracement level.
From the technical point of view, failing to approach and reach the median line (ML) may signal exhausted buyers. The price could turn back towards the lower median line (LML) if this scenario becomes valid.
Outlook
Personally, I would like to see a temporary consolidation above the weekly pivot point of 109.97 or a lower median line (LML) retest before the price resumes its upwards movement.
Right now we don't have a good trading opportunity as USD/JPY is located in the middle of the extended sideways movement. A valid break below the LML invalidates the bullish scenario and brings new short opportunities.