USD/JPY has fallen below SMA200 in the middle of the last week and fluctuated around it forming a Rectangle pattern on the 4H chart. The pattern has 51% quality and 50% magnitude in the 31-bar period.
The pattern started when the pair rebounded from 80.619 and after testing pattern’s lower band at around 79.181 it has slowed at around 79.62 where the pair is currently trading. Patterns resistance band is at 79.926. On aggregate technical indicators point at bullish market outbreak on the 1D outlook. The SWFX market sentiment supports such probability as 70% of traders expect the pair will recover soon. Long traders could focus on the patterns upper band at 79.926. If this level is breached, next targets could be at the daily support levels at 80.1192 and 80.4466 (Fibonacci) and recent high at 80.619.
Short traders expecting negative fundamental news from the US could focus on the daily support at 79.5896 (Fibonacci). If the pair breaches this level, next possible targets could be set at the SMA200 at around 79.32 and the patterns lower band or 79.181 .