Consumers and business in Japan cut spending and Chinese PBOC Yuan devaluation gave additional boost to USD adding to lower Chinese exports in July ( 8.3 % vs prior year ). That all is causing additional concern for a safe haven currency (Yen) and increases concerns for investors. Most important event for USD will be FOMC meeting minutes which is scheduled just after CPI data tomorrow and investors expect additional hints about possible rate hike.
Technically USDJPY is still within the range, but we can spot a Bearish pennant on H4 timeframe. One of the characteristics is the flagpole which marks the distance from the first support or resistance break to the high or low of the pennant. Adding the height of the pole after a successful break usually gives us the target for the move.
If we see H4 close below the pennant USDJPY could proceed lower to test 123.85-75 then 123.45 with a final target of 122.80 which marks the confluence between the flagpole and L5 PP.
A close above the pennant should invalidate the pattern and USDJPY could test 125.20. So, paying attention to H4 and this pattern is very important for traders who trade the pair.
The analysis and the article presents Nenad's opinion. Remember, financial trading is highly speculative & may lead to the loss of your funds. Proper risk management is the Holy Grail of trading.
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