USD/JPY could be forming a bearish Key Reversal Day.
A bearish close on Wednesday will validate the one-day pattern.
It often signifies major peaks and occurred at the highs of the stock market in 2007 prior to the crisis.
USD/JPY is trading back in the lower 151.000s on Wednesday after rising up to a new high of 151.970 during the Asian session, its highest level for decades.
The rapid reversal has been put down to intervention by the Japanese authorities who do not wish to see the Japanese Yen (JPY) depreciate any further.
Such a strong reversal over the course of one day has a special term in technical analysis – it is called a “Key Reversal Day”.
Key Reversal Days are a sign a major reversal in price is on the horizon. It is defined as a day in which price rises up to a new long-term high before rolling over and closing below the low of the previous day (rectangled). The sudden shift in sentiment is indicative of a sea-change in the fundamental outlook for the asset’s price
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