USD/JPY bulls rely on a safety net at daily trendline support

Bulls on the USD/JPY remain in contention with chances of a daily closing over 132.50. The support of the trendline for the USD/JPY pair is crucial at this point.

For the bullish thesis to continue to hold, 132.50 was identified as a crucial threshold that had to hold. This was on a closing basis, though, and a daily close below that level has not yet been observed. Therefore, despite a significant decline in the US Dollar this week, the money longs have been offered a lifeline.

For the possibility of a breakthrough over 134.00, it was indicated that “the bulls will need to commit, however, to the trendline support and preferably to above 132.50/70.”

The bulls are maintaining the line where the trendline meets a 61.8% ratio of the daily bullish impulse, despite the markets’ recent attempt to test bullish commitments at the 132.00 support. The bullish thesis is still valid as a result, but on the 4-hour chart, the bulls must now move above the right shoulder of the head and shoulders pattern. 

While a move below support poses problems for the bulls, as long as the 78.6% ratio holds, it may not be the end of the bulls’ chances. However, a break of the trendline will present problems.