- All eyes are on the BoJ today as the price aligns with key technical structures.
- USD/JPY M-formation playing out and a downside impulse in play that targets the key support structures meeting the -272% and -61.8% Fibonacci brackets.
USD/JPY is teed up for the Bank of Japan meeting later today and is correcting on the charts towards a critical area that the following will illustrate. In the prior analysis, there were prospects of a reversion into the M-formation\s bearish impulse on the prior leg:
USD/JPY prior analysis
USD/JPY H1 chart
We are seeing this correction get underway and bulls will now be looking for a bullish structure to lean against in aiming for a reversion of sorts as follows:
As illustrated, the price was on the backside of the trend and a breakout to the upside had been gathering momentum after a test of the structure around 128.80. The 38.2% Fibonacci was a first target near 129.50 with 131.20's eyed thereafter.
USD/JPY update
The bulls have fallen shy of the 38.2% Fibonacci so far and are headed for a bearish close on the day. However, while above 127.50/88, the bulls remain in playing what could be a phase of accumulation as per the hourly chart:
The following shows the price adhering to a textbook schematic with the M-formation playing out and a downside impulse in play that targets the key support structures meeting the -272% and -61.8% Fibonacci brackets.
The support could prove critical in and around the BoJ event guarding 127.20.
A break below here opens the risk of a significant downside extension:
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