Forex Strategy: USD/JPY Bounces Post Piercing Line Candlestick Formation
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- USD/JPY Technical Strategy: Shorts pending on bearish candle pattern
- Recent gains arose post Piercing Line candlestick formation
- Former trendline support may prompt sellers to emerge and cap further gains
USD/JPY is mounting an assault on former trendline support as the pair retraces some of its recent losses. The bullish advance was foreshadowed by a Piercing Line candlestick formation on the 4 hour chart that occurred near buying support at the 101.25 mark.
A quick retracement back to the original trendline breakout point is commonly followed by a reversal in the original direction of the break. This suggests sellers may look to emerge at current prices and put downward pressure on the pair. However, we’re yet to see a bearish reversal candlestick pattern emerge, and as such a neutral technical bias is preferred. If fresh declines were to materialize, buyers may help prop up prices near the former support level at 101.80.
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Four Hour Chart - Created Using FXCM Marketscope 2.0
--- Written by David de Ferranti, Market Analyst, FXCM
Contact and follow David on Twitter: @Davidde
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