03.02.202320:53 Forex Analysis & Reviews: USDJPY reversal as price exits medium-term bearish channel.

Red lines- bearish channel

Green lines- horizontal resistance levels

USDJPY is trading above 131. Short-term trend has reversed to bullish as price has now exited the bearish channel it was in since October. Price has also broken the horizontal resistance levels of 131-130.50. Yesterday's low at 128.34 is most probably an important low. Traders need to be patient and see how price reacts after today's jobs report and if price starts making higher highs and higher lows. Exiting the bearish channel is an important win for bulls, one that might be the beginning of a new up trend. Let us not forget the long-term inverted head and shoulders pattern that has been broken and we could consider this pull back as a back test of the neckline of the pattern.

Blue line- neckline support previous resistance

Red lines- Inverted head and shoulders pattern

USDJPY has returned back to the big break out area of 128-129. A bounce off this area which is now support, could be the start of the new upward wave that will unfold the potential of the inverted head and shoulders pattern. At the recent lows of 128.34 we also find the 50% Fibonacci retracement of the entire move from January 2021 to 151.96. There is a confluence of support at current levels. Bears need to be very cautious as we could be starting a new up trend.