False Breakout Risks Loom Over USD/JPY Rally

In today’s technical outlook, we’re turning our attention to USD/JPY, which delivered a strong performance in the latter part of last week.
The move upward was triggered by a false breakdown below the orange support zone, followed by a sharp rally to the upside. As trading resumed this week, buyers managed to push the pair above the red trendline resistance, signaling the possibility of a bullish breakout.

However, the breakout is now being tested. The pair has started to retreat, raising concerns that the move above both the red descending trendline and the yellow horizontal resistance (last week’s highs) could end up as a false signal.

Should sellers regain control and drive the price to close below these resistance levels on the H4 chart, market sentiment would likely shift bearish, with downside targets pointing back toward the orange horizontal support. Conversely, a sustained H4 close above the Asian session highs would reinforce the bullish scenario and provide a clearer signal to enter long positions.