In an analysis posted back at the end of August I explained the signs that were showing me that a bounce towards 107.50-108 is possible. Price has moved as expected without breaking below any critical support level.
Blue lines – bullish divergence
Red line – short-term resistance
Green line – channel resistance
Black lines – triangle pattern (broken downwards)
USDJPY has reached our target of 107.50-108. Price could continue higher towards the lower triangle boundary as a back test of the downward break from back in July. Support is at 107.40 while resistance is at 109. Currently price is at a point where I would prefer to be neutral if I had no position. Still this is not the time to open short positions as there is no sign of reversal and it is not a good time to open new long positions as the stop for longs is at the August lows.