USDJPY Descending Triangle Breakout (October 23 2017)

This chart pattern is approximately a thousand pips tall so the resulting uptrend could last by the same amount.

However, the 100 SMA is below the longer-term 200 SMA so the path of least resistance might still be to the downside. These moving averages are still oscillating to indicate consolidation, so these have yet to catch up to the latest upside break. Stochastic has room to climb, which means that there is some buying pressure left in play.

Elections in Japan yielded strong support for Japanese PM Abe and his political party, giving him scope to implement another tax hike in 2019 and push for constitutional reform. This could also mean more support for the BOJ's ultra easy monetary policy, which is bearish for the yen.

Data from the US economy turned out better than expected on Friday as existing home sales rose from 5.35 million to 5.39 million instead of falling to 5.30 million. The federal budget balance also showed a surplus of 8.0 billion USD instead of the estimated 0.9 billion USD deficit and was a huge improvement over the earlier 107.7 billion USD shortfall.

Up ahead, the reaction to the Japanese elections could go on for a while as there are no major reports lined up from the Japanese economy. There are also no reports due from the US economy today so market sentiment and speculation over Trump's next Fed Chairperson pick could push this pair around.

By Kate Curtis from Trader's Way