- USD/JPY bears rush the longs in the Tokyo open, but bulls eye significant correction.
- Bulls eye the daily M-formation neckline.
USD/JPY bears moved in despite the break of structure and the inverse head and shoulders, trapping breakout traders before the slamming reversal on the back of the European Central Bank event and volatility. The US dollar was heavily offered as the euro soared which has sent a bid into the yen with US yields back under par.
Nevertheless, the broadening formation on the hourly chart and support structure points to a bullish correction as the following chart illustrates:
USD/JPY H1 chart, bullish scenario
If the bulls commit to the broadening structure in Tokyo, then we could see the makings of a bullish correction and the prospects of an expansion in price to the upside for the days ahead.
USDJPY daily chart
As per the daily chart, the M-formation is a bullish reversion pattern that could see the price revert to the neckline in a 50% mean reversion for the sessions ahead. Bulls will need to commit to the 137 figure or thereabouts.
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