the USD/JPY made a bullish bounce at the deep 78.6% Fibonacci level and then also broke above the resistance trend line (dotted red). Is the USD/JPY ready for an uptrend?
The USD/JPY bullish impulse could be part of a wave 3 (purple) uptrend. But price action would need to confirm this wave outlook by breaking above the previous top (red) and round level of 110 with strong momentum. The wave 1-2 pattern remains valid as long as price stays above the previous bottom and 100% Fibonacci level.
The USD/JPY bullish breakout seems to be developing a 5 wave pattern (green). The strong impulsive price action is likely a wave 3 (green), which is usually followed by a shallow pullback within wave 4 (green). The Fibonacci retracement levels of wave 4 vs 3 are expected to act as support and a potential bouncing spot. A break above the resistance (red) confirms (green check) the bullish breakout whereas a break below the support and 61.8% Fib invalidates the wave pattern (red x).